Course Subject Assignment Due Date

: Master of Science (M.S.) in Management : Marketing Management : Group case 1 (Sony) : 4 February, 2011

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Contents
Introduction . 3

Problems that occurred with Sony 4 Alternatives in solving these problems . 5 Choosing the best alternative .. 6 Discussion questions 1. What have been the key success factors for Sony? .. 7 2. Where is Sony vulnerable? What should it watch out for? . 3. What recommendations would you make to senior marketing executives going forward? What should the company be sure to do with its marketing? 7 7

Bibliography and References 8

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Introduction
Sony is a leading manufacturer of audio, video, communications, and information technology products for the consumer and professional markets. Its motion picture, television, computer entertainment, music and online businesses make Sony one of the most comprehensive entertainment and technology companies in the world. - http://www.sony.com/SCA/index.shtml

In 1979 Sony revolutionized the music industry with the worlds first portable personal music player, known as the Walkman and later the Compact Disc format, which was another revolutionary product in its own right, not long after the introduction of the Compact Disc, Sony launched the Discman series, a portable CD player.

The first major loss for Sony was in the early 80s when they brought out Betamax for VCRs to counter JVCs VHS format. This was a big learning curve for Sony but later they found a market for Betacam that are still widely used today in the filming industry.

During 1985 Sony launched the Handycam which allowed consumers greater access to personal camcorders. Sonys products and revolutionary inventions were incorporated into nearly every aspect of our daily lives. More products would be introduced throughout the next several years that would continue to expand and shape the market as it is today.

In 1994 we saw the launch of the Sony PlayStation, which became the most successful personal gaming console of all time. It is easy to see why Sony continues being the number one technology company in the market. Their success has been based upon not only their ground-breaking technology, but also their innovative marketing strategies.

Sony used to be a household name but their brand name is losing its credibility in this case study we hope to shed some light on these issues.

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Problems that occurred with Sony

Sony faced strong competition throughout the years, the first major problem was in the early 80s the infamous video-tape format war between Sony and JVC.

In the early 90s, in spite of Sony's modest increase in operating revenues, the net income was decreasing. After the restructuring in 1994, Sonys performance deteriorated even further and reported a $1.5 billion net loss for the fiscal year. With the initial efforts to restructure the company in 1995 and not yielding a positive result, Sony decided to revamp the top management in 2000. This organizational restructuring failed to increase the growth of the company.

In 2005, Howard Stringer became the first non-Japanese CEO of Sony and Sony had undergone yet another major reorganization in 2005. The new CEOs efforts started showing positive financial results in 2007 and 2008 but in 2009 they had a financial loss of $1.2 billion due to the recession.

Sony had gone through a series of reorganization programs in order to develop the financial performance and competitiveness of the company, yet most of them couldnt achieve the desired results. Analysts say that the cause of this was due to the silo culture, which caused a communication problem and no cooperation between divisions in Sony.

Another problem for Sony was that they had not developed their products fast enough, and had lost to its rivals like Apple Inc. as well as Samsung Electronics Co.

Sony had to take drastic steps to compete in the market, so Sony tried to integrate its hardware gadget strengths with software businesses like the internet services, video gaming and movies. Some of these steps showed a loss because of the lack of understanding of the market and the firmware issues.

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Alternatives in solving these problems

Sonys main strategy in solving intricate issues is by increasing brand awareness or brand recognition through marketing and public relations. These promotional efforts are the only controllable means to create awareness to the public of its products and services.

Restructuring and reorganizing has occurred every time Sony has reached a turning point due to major financial losses. It is very hard to determine whether this strategy has been favorable because of the economic instability in 2007 to 2009.

Sony is one of the most comprehensive entertainment and technology companies in the world and by that the first vital factor is making all these divisions function cooperatively. Sony tried solving this issue by employing non-Asian executives to manage certain aspects of the company.

Sony has a desire to make innovative and useful electronic devices and has set the standard for all competitors but the first and foremost downfall of Sony is trying to enforce a set software format (Firmware) for all their products. For that reason competitors has outsmarted, outsold and outdated many of Sonys products. From Betamax, MiniDisc, PlaySation series, Bravia and Blue-ray, Sonys reasoning for setting limitations on their products is to prevent imitations and piracy. That is a solution in itself but it has a far greater impact on sales.

One of the other factors of Sonys declining image is the pricing of its products; to compete with your competition you need a competitive price. Once profits are down Sony would sell its products at a fraction of the cost in order to regain the market. This strategy might solve the financial loss but it creates an image for consumers that Sonys price range is out of touch with the current market.

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Choosing the best alternative

There is no easy solution but a series of solutions that has to be implemented systematically. The best way to explain this is by listing it in phases:

Phase 1: Sony should keep an ear to the ground and be more aware of the feedback of its consumers, research, analyze and implement an open discussion board for the public. This will keep you more in touch with your main source of income, the consumer.

Phase 2: The feedback of the consumers would identify product and service faults and so preventing the same marketing and production mistakes, such as Sony has done over the years.

Phase 3: Piracy has a great impact on sales but creating more universal devices can ensure a bigger after market with upgrades. Instead of opposing it they should embrace it, Sony has a great range of products but all consumers need flexibility not limitations on those products.

Phases 4: Profit is the sole purpose of any business but to ensure the survival of a company they need to put more emphasis on their electronics division, that is their bread and butter. Quality and affordability should be their main goal in order to ensure loyalty from their consumers.

Phase 5: Marketing and public relations are vital components in a competitive market and that is one of Sonys strong points but sometimes being over protective and overzealous can have a negative result. A company that can accept their faults is the best strategy for public relations which makes the public believes that by accepting fault follows improvement.

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Discussion questions What have been the key success factors for Sony?
Innovation, creativity and timing gave Sony a unique image, and marketing that image Sony could dominate the market. With every failure they had restructured and adapted the company, by doing so Sony could ride the gravy train of success over the last few decades.

Sonys business strategy was creative marketing, understanding market trends and knowing the difference between taking risks and gambling. Expanding and infiltrating every aspect of the entertainment business, these strategies made Sony what it is today.

Where is Sony vulnerable? What should it watch out for?

Sonys vulnerability is the lack of communication within the corporation; every division has its own agenda that conflict with each other, this has been the downfall of many businesses. Also with every expansion of a business the more difficult it becomes maintaining control. Sony has become such a large corporation that it has lost focus of its ideals and has become vulnerable to competition.

What recommendations would you make to senior marketing executives going forward? What should the company be sure to do with its marketing?
They should consider putting more emphasis on their electronics division, reprioritizing their goals by ensuring better quality, market price and being more in touch with customer needs. Marketing always plays a key role but without providing a product that offers more features, usability, and competitive prices, marketing wouldnt have the desired effect.

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Bibliography and References

http://en.wikipedia.org/wiki/Sony http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/BSTR361.htm http://www.answers.com/topic/sony http://www.davidairey.com/how-sony-killed-their-brand-a-case-study/ http://www.milienzo.com/2007/03/11/sony-the-next-gen-brand-of-doom/ http://www.boingboing.net/2006/02/15/sony_drm_debacle_rou.html http://kotaku.com/gaming/top/sony-blackballs-kotaku-240860.php http://www.sony.com/SCA/index.shtml http://wiki.answers.com/Q/What_are_the_key_success_factors_of_sony#ixzz1CsFEhOLx http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article1658056.ece

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