Marketing management principles and practices

Marketing Plan for Digital Camera

Situation Analysis

Sony Corporation is a global leader in the research & development, design and manufacturing of optics-based products including high-resolution digital cameras for personal and professional use. The HDNA technology the company has pioneered is redefining high definition digital photography for the amateur and professional photographer alike (Smith, 2008). Sony also has exceptional control and skill in manufacturing, which has given the company the ability to quickly translate innovations into completed products (Chang, 2010). The Sony corporate culture puts a very high value on taking ownership of innovation and the development of digital platforms and products that liberate consumers to live as the choose (Cooper, 2000). This is the mission their engineers are on and one that energizes their business analysts in constructing new approaches to product development, customization and service (Chang, 2010). Given the strength of the Sony corporate culture to innovate, it has succeeded where other purely technology-driven companies have failed. To understand why this is, an analysis of the company is presented in this section including a PESTLE Analysis, Internal Analysis and SWOT Analysis. Each of these provides a varying glimpse into the approach the company takes to managing innovation, customer relationships, and long-term growth.

PESTLE Analysis

The PESTLE framework continues to provide strategists, analysts and academicians with the insights that are critical for understanding how the company's internal core competencies and strengths are best aligned to opportunities while alleviating threats. Sony has created a brand known for rapid, creative and ingenious innovation that looks to help consumers enjoy entertainment while attaining mobility and freedom of movement at the same time (Chang, 2010). The innovations in MP3 players and previously, in the Sony Walkman, exemplify this innate strength of the company. Due to the rapid pace of innovation, Sony has enjoyed significant success with its channel strategies and development of selling and services globally. With this core competency and strength in perspective, the following PESTLE analysis is provided:

Political factors: Sony has been fortunate in that it has not been involved in the more contentious aspects of the American-Japanese balance of trade. The very contentious time between the United States and Japan during the 1980s when Toshiba was accused of dumping memory chips, disk drives, laptops and selling sophisticated milling machines to the Russian Navy to make their noise signatures so low they were not detectable on sonar (Nwachukwu, 1993). This incident, still recalled by the older members of the U.S. Congress and Senate when the balance of trade is discussed in government, illustrates how just a single subsidiary (Toshiba Machinery Company) with a lack of ethics can nearly bring a global conglomerate from being blacklisted from its largest market (Nwachukwu, 1993). Sony only was partially impacted by this incident and has since long been able to overcome any association with Toshiba because of the incident. Today, in 2011, Japanese managers from the previous generation and sharing the accounts of how this violation of trust with their most dominant trading partner, the U.S., nearly cost Toshiba the laptop market and their right to operate in this nation (Ohishi, Naoto, 1993). The Toshiba Machinery Company story is a cautionary tale that many Japanese managers are using to permeate authenticity, transparency and trust throughout their organizations. Sony has one of the most advanced ethics training programs in the industry and regularly has Toshiba executives, now retired, visit and speak about the need for ethics and transparency in dealing with global governments (Ohishi, Naoto, 1993). Because of this communicative and collaborative approach to managing knowledge throughout the Japanese high technology industry, the current generation of Sony executives has alleviated any of these types of major ethical gaffes or errors in judgment. In conclusion, on this factor, which can be a major impediment to global growth for any Japanese manufacturer, Sony has been very focused on learning form past mistakes to excel at political lobbying and the development of effective relationships.

Economic Factors:

With the majority of revenue generated by Japanese companies from exports, Japanese companies have become very adept at analyzing and predicting economic cycles in their core markets (Johansson, Ikujiro, 1987). The Japanese are also by nature a highly collaborative culture, with risk mitigation through communication being a high priority (Ohishi, Naoto, 1993). With these factors in mind, the Japanese approach to economic turbulence is to trim back all fixed costs and minimize variable expenses, as currency fluctuations can cause significant impacts on their profitability. Due to all of these factors, Japanese manufacturers are also more focused on how to create new products that quickly, within months, capture significant market share as this is the phase when the majority of profits are generated (Nwachukwu, 1993). The global recession has made Japanese manufacturers concentrate more than ever on how they listen to and react to customers as well, as Panasonic regularly rotates its senior management teams through foreign markets (Johansson, Ikujiro, 1987).

Another strategy Japanese manufacturers are relying on to alleviate economic turbulence and disruption is to create knowledge sharing networks with their suppliers. Toyota has been one of the leaders in creating supply chains that are also knowledge sharing networks (Dyer, Nobeoka, 2000). This approach to creating a knowledge-sharing network also spreads risk evenly throughout a supply chain, which significantly reduces inventory exposure costs. Toyota pioneered this approach to creating knowledge-sharing networks with suppliers which alleviated being too invested in one set of suppliers from one geography, thereby spreading risk throughout their global supply chain (Dyer, Nobeoka, 2000). The knowledge sharing aspects of the network also continue to streamline communication and collaboration was well (Dyer, Nobeoka, 2000).

Social Factors: Demographics globally continue to shift to an emphasis on Baby Boomers, Millennial workers, and their health care needs, which is completely re-ordering the structure of many institutions globally. Social networks have also re-ordered how people, organizations and groups communicate globally, breaking down barriers between companies and customers in the process (Bernoff, Li, 2008). In addition, Facebook, Twitter and other social networks are now redefining and remaking brands by customers' perceptions and satisfaction levels first, and secondarily on communications spending, public relations and advertising (Bernoff, Li, 2008). This social change has major opportunities for Sony in their product development strategies, including the development of entirely new cameras that allow for quick, one-click sharing of images and videos to YouTube, Flickr and other video sharing and photo social networking sites (Bernoff, Li, 2008). Given the recent events in Egypt including how quickly the Internet was shut down to silence dissenting voices to the government there, ironically that action showed just how powerful social media and social networks have come. For Sony, this new openness and focus on freely sharing video and digital content online underscores their development and market focused strategies for the long-term. There is a combining of social networks and the broader social actors they represent. For Sony, designing products that capitalize on these factors is crucial for their growth. The design-in requirements for social media and social networking is a given, as these factors continue to reshape how society communicates, shares and collaborates both on an individual and corporate level.

Technological Factors: As the Sony culture is one that values innovation and initiative on technological projects higher and with more regard than any other, the focus on developing new product is critical to not only their survival but also the cultural continuing to evolve as well (Chang, 2010). The founders of Sony defined innovation practices and roles with a deliberate focus on making new product development the greatest strength of their business (Ohishi, Naoto, 1993). That emphasis on creating an organizational structure that can effectively deliver innovation is also seen in how Sony creates a shared knowledge network that replicates the approach taken by Toyota (Dyer, Nobeoka, 2000). Sony has more patents than the top five electronic manufacturers combined in Japan, a feat accomplished through the development of its entrepreneurial approach to allowing engineering to nurture their projects from prototypes to business units (Chang, 2010). All of these factors illustrate how committed Sony's founders are to innovation and how they have created systems to nurture and grow these aspects of their business over time.

Environmental Factors

Sony's ability to innovate also applies to its ability to sense what is most critical for its key customers for a sustainability and green or energy-efficiency standpoint as well. The importance of green computing, low-power consumption laptops and systems, and the development of highly recyclable product designs are a major priority within Sony, as sustainability of products is a design objective (Olenick, 2010). Sony is managing to transform the focus on sustainability or green products into a competitive advantage by unleashing the innovation it has, creating entirely new systems and processes to meet user's requirements in these areas. The concentration on making product lines capitalize on environmental factors is just a segment of the companies' strategy for taking the rapid changing occurring globally and working it to their advantage. As many nations now require corporations who are creating manufacturing and distribution centers in their countries to have complete Corporate Social Responsibility (CSR) initiatives and programs in place to enrich surrounding communities, Sony has responded by taking this a step further and requiring their suppliers globally to do the same (Svensson, 2009). The approach Sony continues to take is one of concentrating on continual process improvement to become more agile and resilient in the face of environmental factors (Olenick, 2010) while at the same time seeking to comply with national requirements for sustainability and green initiatives including supply chain compliance (Svensson, 2009).

Legal Factors -- Sony has a culture that embraces learning as a virtue, and continually strives to gain insights from the experiences of other Japanese companies and their legal and regulatory lessons learned. The case mentioned earlier of Toshiba Machinery Company and their sales of unauthorized milling machines to the Russians decades ago still is a foundational element of Japanese ethical training for managers (Ohishi, Naoto, 1993). As the United States and other western nations have continually seen the level of compliance and reporting escalate up through government edict, Sony has continually had to increase its focus on contract management and legal expertise across multiple geographic regions. The costs of this are among the highest the company incurs from a subsidiary standpoint, yet Sony senior management believes that ethical conduct is part of their brand and without it; they would lose the trust of both customers and governments globally.

Internal Analysis

Despite the global recession of the last three years, Sony continues to show financial resilience and the ability to bounce back from significant financial losses in 2009. During their last fiscal year, the company grew 4% year-over-year. If currency fluctuations are taken into account, Sony would have grown at a 13% rate from 2009 to 2001, an impressive ramp given the losses they experienced in 2009 (BusinessLine, 2010).

This financial growth was driven by Sony's core competencies in the areas of LCD television production, with sales up 19% year-over-year, and high-end Viao laptops, the sales of which are up 24% year-over-year (BusinessLine, 2010). These two product families are where the majority of R&D investment continues to be made by Sony, with heavy emphasis on HDNA technology and low power consumption laptops to meet the European Union green computing requirements (Chang, 2010). Most significant and illustrating these core competencies for the company, operating profit increase to ¥69B, up from an operating loss of ¥33B in the previous year. Sony management credits this significant revenue turn-around to the emphasis on process improvement and re-engineering, two critical areas of focus within the LCD TV and laptop business units (Olenick, 2010). The well-known Sony PlayStation 3 sold 3.5 million units in 2010, which is an improvement over previous years where the PlayStation did not sell over 3 million units (BusinessLine, 2010).

An internal analysis of Sony's financial performance also shows that the company has successfully been able to accurately discern just what R&D, sourcing, supply chain and production processes need to be modified quickly and thoroughly for the company to gain revenue coming out of 2010 (BusinessLine, 2010). Personal electronics including cameras, netbooks and MP3 players continued to gain market share and contribute to the turn-around in earnings from 2009 to 2010.

The internal analysis of Sony indicates that it has exceptional strength in research and development (R&D), accuracy and agility in defining which processes need to be changed and why (as is the case with LCD TVs and PCS0, and also has exceptional control over their distribution networks and channels globally. These results also indicate that the cost of manufacturing at Sony is higher than average for the industry, as their volume to profit levels are low compared to high tech electronics companies (BusinessLine, 2010). This is due to the high costs of operating in Japan and having the majority of its subsidiaries in the United Kingdom and the U.S., two countries that are relatively expensive to operate in.

SWOT analysis

Based on a thorough assessment of Sony's operations, its innate strengths at innovation and the relatively high cost to manufacture relative to competitors, the following SWOT analysis has been completed. Sony's strengths, as has been mentioned multiple times throughout this analysis, are their exceptional command of the innovation and R&D process. The structure of the organization itself as an enabler of innovation is clear, as it leads Japanese manufacturers in patents and in pace of innovation (Chang, 2010). Additional strengths include an exceptionally strong brand and geographic breadth of distribution channels. Sony's weaknesses a very high cost to manufacture and coordination of business units to mitigate losses quickly. Sony excels at process improvement yet cannot move quickly enough as an organization to alleviate the losses it incurred in 2009.

Sony's opportunities include a growing global and consumer industrial electronics market, greater levels of strategic alliances and acquisitions, and significant growth potential in the Brazil, Russia, India and China (BRIC) nations. Threats includes the ongoing fluctuations of foreign exchange rates, ongoing uncertainty over economic conditions, the rising level of compliance and regulations, and the recurring problem of counterfeit goods mostly throughout Asia and the Middle European countries (BusinessLine, 2010).

Marketing Objectives

New Product Definition

Given the en masse adoption of social networks, the need exists for a digital camera that has a display large enough to support previewing images, videos and integrating them onto websites and blogs. The Canon Eleftria 5000 is the proposed product to meet this need. The unique selling proposition of the Eleftria 5000 is that it can be customized to the unique needs of the consumer. There will be over 100 different variations of the model that consumers can order online, in Sony stores and also from channel partner's websites. This is a digital camera meant to serve as a platform in much the same way that the Apple iPad has become the development platform of choice for many of the latest Apple applications. The focus on how to make the Eleftria 5000 a communications center that is smaller than an iPad yet can deliver high-resolution images is the goal of the product design and messaging. The design of the Eleftria 5000 is both lightweight yet also capable of supporting high resolution image editing and uploading on the fly. It will also have two-way conferencing capability and live interactive video and Web chat built into its operating system. Sony engineers it is a design that outdistances Apple at innovation and opens up significant growth opportunities for the company.

Marketing Objectives

The following are the key marketing objectives for the Eleftria 5000:

1. To attain 50% gross margins through Sony Style Direct website sales by creating an online configurator capable of capturing the product design and in real-time communicating it to Sony factories and manufacturing outsource providers.

2. To attain 500,000 units sold throughout all distribution channels within the first six months of product introduction globally.

3. To earn 35% gross margin across all indirect channels within the first full year of sales.

Marketing Plan

Market Segmentation

The market segments that will find the Eleftria 5000 of the most value are males 18 -- 45 years of age who are interested in using the Eleftria 5000 as an interactive gaming platform in addition to conferencing device with f4riends. The secondary market are girls in the 18- to 45-year-old segment, whose interest in the Eleftria 5000 is also in the videoconferencing benefits, yet this group will be more active on Facebook and Twitter, according to studies of comparing iPad usage.

e-Business and Social Media Strategies

The product introduction will rely heavily on all forms of social media including interactive Web pages, a blog and also a series of Twitter accounts that will send out discount codes for consumers to get 10% off the Eleftria 5000. As part of the product introduction a YouTube contest will also be held to see who can create the most effective videos of the unique benefits and advantages of the Eleftria 5000. A Facebook Fan page and application will be developed that allows each new customer to upload their videos and share their initial pictures online as well.

The Eleftria 5000 will also have Eleftria Connect, which is 25GB of free storage for every customer who purchases the camera in the first 90 days. Eleftria Connect will be used as an incentive to get customers to upload their files and images, further creating a unique online experience of the camera. The goal is to create a unique online community where the experiences of using the Eleftria 5000 can be readily seen.

Target Markets

Based on an analysis of Securities and Exchange Commission (SEC) filings by Sony the following demographic profile has been developed for the Eleftria 5000.

Figure 1: Anticipated Demographic Segmentation for the Eleftria 5000

Market Segment

Share

Males 18-45

40.0%

Females 18-45

28.0%

Males

Females

Males >45

6.0%

Females >45

2.0%

Source: Sony Corporation 1Ks and Securities and Exchange Commission Filings

http://www.sony.net/SonyInfo/IR/library/sec.html

The demographic breakdowns are based on the sale of high-end SLR cameras sold by Sony throughout the last five years as reported in the 10Qs and filings with the Securities and Exchange Commission. These demographics are the same where Facebook, LinkedIn, Twitter and other social networking sites are gaining popularity and use. Concentrating on the higher-end SLR buyers whose incomes are above average also ensures a greater degree of pricing flexibility as well.

Positioning and Differentiation

The name Eleftria in Greek means freedom. The intent of naming the camera the Eleftria 5000 is to underscore how free the customers will feel when they can instantly upload and share their pictures from anywhere, anytime. This includes videos and the ability to have two-way or multi-way video conferences as well. The positioning centers on agility and setting people free from their desks, cubicles, laptops or PCs so they can really enjoy life and also be more productivity. The value proposition will center on making people productive by providing a means to enable greater collaboration and communication. The freedom to communicate and work how they choose, while also capturing excellent photographs and being able to share them instantly from anywhere in the world, anytime, is the vision of the Eleftria 5000. As with any successful product, this one strives to create a highly unique and differentiated experience that allows users to redefine the product to match their needs and preferences. That is the reason that the production strategy allows for up to 100 different variations of the Eleftria 5000 to be manufactured to users' unique and specific needs. This unique value proposition of customization will also create a more effective marketing strategy, as inherent in any message of freedom is the ability to break stereotypes and be who one really is. That is the vision of the Eleftria 5000, to allow customers that freedom to allow whom they really are to come out in the pictures they take and content they produce. The product concept is specifically designed to support the creation of a highly unique and differentiated customer experience, which is critical to communicating value in any product or service (Chesbrough, 2011).

Marketing Mix

Product

The Eleftria 5000 is designed to free the consumer to define themselves through the use of the camera while at the same time staying connected to the social networks with an always-on Internet connection. There are many technologies to accomplish this, but the most proven is EV-DO, an advanced approach to always providing a connection to the Internet (Lee, Kwak, Kim, Kim, 2009). The EV-DO technology will allow the Eleftria 5000 to stay connected to the Internet regardless of its proximity to any Wi-Fi location. From this standpoint, the camera becomes an anytime, anywhere publishing platform. The product will also be thinner, lighter and have dual high-resolution cameras, in addition to photo editing and posting software embedded in the chipsets or electronics of the device to ensure fast response time to consumers. The lens will support configuration from 5MP to 15MP, and will also have SLR point-and-click functionality in addition to rapid filming of video clips as well. As part of the configurability options, the Eleftria 5000 can have any customized "skin" or veneer on it the customer requests, even their favorite pictures or favorite public-domain artwork. This is to further support the concept of extreme freedom that the Eleftria 5000 provides to customers. Additional customization options include the flexibility of creating a unique carrying case, a modular series of attachments and options to increase voice quality and clarity, and a series of different screens and optics for the viewing areas.