Nintendo company strategy and market analysis

Nintendo Case Analysis

In November, 1998, Nintendo launched Game Boy Color, the latest in its line of handheld videogame consoles and the first handheld Nintendo consoles to feature full-color graphics. Videogame sales had been declining over the previous decade, following the initial boom of the 1980s, and Nintendo's Game Boy sales in particular had dropped from its initial debut in 1989. Although the Game Boy was a resounding success considering the volatility of the videogame market, in many ways the launch of Game Boy Color was a make or break moment for Nintendo, because although it had beat out Atari, Sega, and others, it's supremacy was rapidly being challenged by Sony, whose Playstation console, with its sleek design and more "mature" range of software choices, threatened to make Nintendo seem old-fashioned and irrelevant. The importance of the launch was heightened even more in Canada, because Canada simultaneously represented one of the largest and arguably underserved markets, and Nintendo Canada was responsible for adapting elements of Nintendo of America's advertising campaign to fit its own unique context. Peter MacDougall, president of Nintendo Canada, was faced with a number of options concerning pricing and marketing, based not only on Canada's particular market but also the way videogames had been sold in the past.

While some of the thinking behind these options was productive, much of it was based on a myopic understanding of videogames role in the wider media landscapes, as well as the potential age range of the audience. Examining the available options with an eye towards the product's historical context and Canada's unique market reveals that MacDougall's best option would be to target kids, tweens, and adults, focus on hardware in print ads and software in television ads, and only use the cheapest elements of the consumer sampling program that require minimal support or maintenance. Although some of these decisions may appear counter-intuitive at first, examining them in conjunction will demonstrate how Nintendo Canada could use the launch of the Game Boy Color to dramatically increase its target market and profitability.

The first question to be addressed is the target market, because this will determine the rest of the marketing and run-up to launch, and is the area where Nintendo Canada has the greatest opportunity to do something truly impressive. At first glance the question appears to be between marketing the Game Boy color to either kids and tweens on the one hand or teens on the other, but this ignores a highly lucrative portion of the market, and one that, due to historical circumstances, would be especially primed for the new product; namely, adults, and in particular adults who were children when the first wave of videogame consoles came out in the early and mid 1980s. Although Nintendo of America was planning some print ads aimed at adults, historically they had not been considered a primary market, mainly due to the impression that videogames are for kids. However, someone who was thirteen at the time of the Nintendo Entertainment System's initial launch in 1985 would be twenty-five or twenty-six by the Game Boy Color's launch in 1998, just enough time to successfully capitalize on a sense of nostalgia while playing up the Game Boy Color's status as the latest "futuristic" gadget. Furthermore, this age group has far more disposable income than teens, and has the added benefit of making the Game Boy Color look "cool" precisely by making it look more adult; in the same way that MacDougall hoped that popularity with teens might translate to popularity with kids and tweens, marketing the Game Boy Color to adults in their mid-twenties would make it more attractive to teens precisely by presenting as a marker of age, status, or independence, things nearly every teen longs for but has in little supply.

At the same time, however, it would be foolish to ignore the popularity of videogames with kids, particularly if the launch is occurring right before Christmas. Thus, in addition to marketing the product to adults, MacDougall and Nintendo Canada would do well to simultaneously market the Game Boy Color to kids and tweens. As MacDougall noted, kids and tweens were less likely to own a Game Boy already, thus making it likely that Nintendo Canada could ensure that the Game Boy Color topped their Christmas lists for 1998. Intentionally targeting adults and tweens while implicitly ignoring teens has a number of benefits, and actually reduces the potential risks of marketing too heavily to one age group. For instance, by marketing the Game Boy Color to both tweens and adults, MacDougall could make sure to capitalize on the tween market while obviating the potential for teens to view the device as something they had as a kid; kids and tweens could view the Game Boy Color as an entirely new device, while the adult-oriented marketing could capitalize on adult nostalgia while encouraging teens to view the Game Boy Color as an updated, more mature version of the Game Boys that they previously used. In effect, by essentially ignoring the teen market in favor of tweens and adults, MacDougall could reach practically every demographic without running the risk of one demographic's targeted marketing negatively influencing the Game Boy's appeal to neighboring age groups.

Furthermore, it could be worthwhile to include a focus on targeting females, due to the fact that they represents a largely untapped market, as "approximately 75 per cent of all Game Boy users are male." This does not have to represent an entirely separate marketing effort, but rather could simply be one element of the larger effort. For example, in advertisements that focus on software, special emphasis could be placed on Samus, the main character of the popular Metroid series of Nintendo games, who also happens to be a woman.

The selection of target markets leads one quite naturally to specific marketing communications, and particularly the media vehicles to be used. MacDougall planned to spend 80% of his advertising budget on television, but if the decision is made to market to kids, tweens, and adults, then this number would require some tweaking, particularly in regards to the amount allocated for print advertisement. Television would of course be effective for reaching a wide audience, and especially kids and tweens, who are less likely to read the kind of periodicals that might feature print advertisements. Because of this, television ads should highlight software, both to highlight the console's bright colors and to imbue the advertisements with the motion and excitement that is integral to videogames. Furthermore, because marketing targeting kids and tweens would be intended for an audience with little to no prior experience with Game Boys, the specifics of the hardware are actually less important, as there is no need to convince kids and tweens to upgrade.

In contrast, print advertisement should focus on the hardware itself, especially because these advertisements are more likely to reach adults (and teens, particularly if they are placed in comic books; in the same way that the videogame audience matured since the 1980s, so too has the comic book audience grown up over the course of the 1980s and 90s). Highlighting the hardware will not only make it easier to capitalize on adults' sense of nostalgia, but will also help to convince owners of other game consoles, whether handheld or stationary, that the Game Boy Color represents a dramatic enough technological shift that it is worth the upgrade price. Furthermore, by highlighting the fact that the Game Boy Color features new hardware but can play old games in print ads MacDougall could offer further incentive for adults and teens, who may already own numerous Game Boy games, to upgrade. Print advertisements would still represent a substantially smaller portion of the budget than television advertisements due to their respective costs, but by balancing the advertising budget more equally MacDougall could more effectively reach his target markets.

It is of paramount importance that the advertisements do not mention or allude to competitors for a number of reasons. Firstly, mentioning or alluding to any competing handheld consoles will diminish the Game Boy Color's biggest appeal by reminding the audience that a color handheld is nothing new. Although the Game Boy Color's screen features newer and better technology than its competitors, a parent buying a console for their kid or tween will likely not know or care about the difference, and attempting to point out these differences will only serve to reduce the Game Boy Color's sense of uniqueness. Those adults purchasing one for themselves will likely already be aware of the differences, and thus highlighting them will be unnecessary. Furthermore, if the marketing is to appeal to adults sense of nostalgia, it would be counterproductive to mention the Game Boy Color's contemporary competitors like Sega or Sony; instead, it should be presented as the evolution of Nintendo's past consoles. This is particularly true because in contrast to many of its competitors, Nintendo is an extremely old company, having gotten its start manufacturing playing cards in 1889, and by presenting the Game Boy Color as the latest model in a long line of well-loved consoles rather than one more in a crowded field, the advertising could maintain much of the brand loyalty that developed over the course of the 1980s and early 1990s.

In terms of the consumer sampling program, only the low-cost interactive display should be considered, because the other two options cost too much, require too much human capital, and bring up images of carnival barkers and fairgrounds when Nintendo should be pushing itself as the wave of the future and the Game Boy Color as a portable, singular experience. One of the major appeals of the product is that it is compact and portable, so inserting another human being in between the customer and the product in the form of Nintendo representatives would only serve to diminish this sense of instant entertainment, anywhere, anytime. Furthermore, the lower-cost, in-store displays could achieve many of the same ends for much less effort. Firstly, an in-store display creates a kind of public spectacle, but one in which the player himself becomes part of a living advertisement, rather than an official company representative. Having one console per store all but guarantees that there will be spectators and a queue, which serves to generate greater excitement while increasing the time that any one person spends around both the console itself and any games for sale. Because most of the long-term profits will be generated from software sales, increasing the time customers spend simply standing near the software, and thus increasing the likelihood they will browse the available titles, is an important element of the larger marketing effort.

While public relations efforts to get the Game Boy Color featured in leading gaming magazines and web publications is of course important, the potential exists to gain greater coverage simply by highlighting the marketing campaign itself. For example, the decision to market the Game Boy Color to adults could be of interest to business publications, and even a brief mention of a campaign aimed at adults could actually serve to legitimize the marketing's argument that console was "mature" or adult-oriented. Thus, every fluff piece about how Nintendo is trying to say that "videogames aren't for kids anymore" would actually implicitly make the case that videogames are not exclusively for kids. By presenting videogame marketing as something of interest to adults, the public relations campaign would actually succeed in making videogames something of interest to adults who otherwise would not give them a second thought.

Because Nintendo Canada would do well to market the Game Boy Color to adults as well as kids/tweens, it is important to keep the price the same as in the United States. This continuity will prevent any friction between Nintendo Canada and its international partners, and the fact that the prime purchasers will be adults (whether they buy it for themselves or their children) should be enough to ensure a high enough sales volume. To offset the possible perception that the price was too high, Nintendo Canada should include a game bundled with the hardware, but should attempt to market the bundled game as the beginning of a collection, in order to encourage higher software sales. Arguably the best choice for the bundled title would be the Game and Watch Gallery 2, a compilation of some of Nintendo's earliest games (including the first appearance of Mario as "Jumpman" in Donkey Kong) and one of the Game Boy Color's limited launch titles. Furthermore, because the Game Boy Color is being marketed as an upgrade, it is important to stop the sale of the older black and white version immediately, because keeping it in production would diminish the importance of the Game Boy Color and the perceived need to upgrade. In fact, the "retirement" of the black and white version could even be incorporated into the marketing campaign as a way to highlight the technological development of the Game Boy Color while encouraging previous owners to upgrade.