Micro and Macro Analysis of Nintendo - Assignment Example

?Nintendo Table of Contents Table of Contents 2 Overview 3 Macro Environment 3 Laws and Regulations Affecting Nintendo 3 Legal Action Monitored Against Nintendo 4 Opportunities 4 Threats 5 Competitive Environment 6 Relevant market for the Organization and Industry 6 Target Market of Nintendo 6 Rating of Nintendo from the Viewpoint of Buyers 7 Emerging Needs of the Customers 8 Changing Strategy of Nintendo 9 Buyer’s Bargaining Power 10 References 12 Overview Nintendo is a game development company. It develops both video games and software. It is a Japanese company. This company was established in the year 1933 as an unlimited partnership, Yamauchi Nintendo & Co. In the year 1951, the company name was changed to Nintendo Playing Card Co. Ltd., the first company manufacturing plastic playing cards. In the year 1963, the company changed its name to Nintendo Co. Ltd. This company now manufactures games instead of playing cards (Nintendo, “History of Nintendo Worldwide 1889-1979”). Macro Environment Laws and Regulations Affecting Nintendo Nintendo is already established in the international market. It meets the terms with consumer protection laws. Nintendo always executes necessary steps to ensure that legal actions are followed strictly in respect of patent and licensing of the Nintendo products (Tine, “Marketing Proposal for Brand Extension in Japan and the US: The Nintendo TiiVii”). The ‘copyright infringement of Software’ and software piracy related laws and regulations had previously affected Nintendo and can affect them in future too. Therefore, EULA (End User License Agreements) is a vital regulation in order to protect the interest of Nintendo. Intellectual Property Rights i.e. patents, trademarks, copyrights are crucial legal aspects affecting Nintendo (Nintendo, “Legal Information (Copyrights, Emulators, ROMs, etc.)”). Legal Action Monitored Against Nintendo Every nation encompasses certain acts relating to business such as Unfair Trade Practice Act, which provides protection to retailer and wholesaler from selling below the cost. In the year 2003, Nintendo was sued by Europe Commission for price fixing. Nintendo joined together with seven different distributors to leave out from trade from places that deal with Nintendo products at high cost and merely obtain the Nintendo products from the countries with lower prices. Opportunities In future, it is expected that people will choose single player game rather than multiplayer. The Games Segmentation Report of 2008 concludes that the Playstation 3 and Xbox gamers would really prefer to see Wii as their next gaming system. People already into gaming can perceive Wii as unique, and those who are non-gamers will realize that it is simple to use and start playing. The gamers are always curious about new games and new technologies and Wii will fulfill their needs. In the present era, teenagers are likely to use their money for entertainment purposes that brings an opportunity of Wii to become an element of their spending. Most people desire to loose weight without going to gym. “University of Wisconsin” and “American Council on Exercise” studied that playing Nintendo Wii games increase heartbeat rate and oxygen intake, thus making body fit. Therefore, Nintendo can provide a unique opportunity for people to gain health benefits by playing games (Pilcher & Et. Al.,” Nintendo Wii”). Threats When Wii was first released it had multifarious technical troubles. They were not durable and this problem caused a bad reputation to its consumers. At present there is no product which can provide same system as Wii does, but in future Playstation, Xbox or other competitors can create similar gaming system as Wii. The economy is at the recovery stage post recession, thus people may not prefer to spend their valuable money on such gaming purposes. This acts as a threat to Nintendo. Competitive Environment Relevant market for the Organization and Industry The two big competitors of Nintendo are Sony and Microsoft. On 19th November, 2006 Nintendo launched the Wii. It is a video game console with an exclusive wireless controller, known as Wii remote. Nintendo launched Wii to compete with the PS3 (Play Station 3) developed by Sony in the year 2005 and Microsoft developed X-box 360. The US market is prime relevant market for the gaming industry where all the major gaming console players generally launch their product (Icmrindia, “Introduction”). Target Market of Nintendo The target consumers for Nintendo are the families with babies, teenagers, pre-teenagers generally of working parents (Tine, “Marketing Proposal for Brand Extension in Japan and the US: The Nintendo TiiVii”). However, since games are enjoyed by the majority of people, almost every person fall under Nintendo’s target market, right from young to aged irrespective of gender. Thus, Wii and DS were created with this thought in mind. Wii targets the kids because of its simple use and it offers a broad selection of family games. Furthermore, the innovation of motion sensing technology allows the gamers to come up with various improvements while operating the games, which has attracted both gamers and non gamers as well. However, when the target market of PS3 and Xbox 360 is focused, it is clear that they focus on a fixed target audience of young people and middle aged people. The aim of PS3 as well as Xbox 360 is to “bring to life the sociability and fun of the season as well as connect with the key target audience of 16-34 year olds.” (“Sony PlayStation”). Thus, Nintendo appears to be taking a different route to cater to a larger target market. “Both PS3 and Xbox 360 target are going after same target audience whereas Wii is trying to carve out a different segment of the market.” (“PS3 VS Xbox 360”). Rating of Nintendo from the Viewpoint of Buyers The buyers rate the products of Nintendo quite highly, and one such product, Nintendo’s Wii has a broad range of games and accessories. Wii has been providing the console, the wireless remote and importantly motion sensing controller, the fit board and many other accessories from the initial stages. On the other hand, PS3 and Xbox are providing these accessories, particularly the motion sensing controllers, Move and Kinect now only. So, Nintendo appears to be the pioneer and forerunner, when it comes to the introduction of wireless motion sensing technology. However, others are catching up Nintendo with more advanced additions to this motion sensing technology. “So far, WII has revolutionize the game industry with stick movement sensor controlling system. But what Microsoft is trying to do, is they make your body as the game controller!!” (“Kinect Sensor with Kinect Adventures”). Being a pioneer, Nintendo DS, Wii have received tremendous response from the buyers, with the products offered turning out to be the prized possession of global consumers. The Price of the Wii gaming console is approximately $250. It is a bundle price as it includes the main gaming console, Wii motion sensing controller as well as other accessories. This is much lower than other competitors. Because PS3 with all its controllers and accessories comes at a bundle price of $400, while Xbox 360 is bundle priced from $300 to $400. (Benedetti). While high cost of the competitors could indicate an advanced level of quality, Wii also attempts to have good quality at a lower price as well. Nintendo makes up the price difference and without compromising on the quality, by reducing its marketing campaign costs. The company continuously modified its product offering to satisfy the customers need and increase sales force within the electronic entertainment industry. The Wii had a successful introduction into the game console industry and also generated high volume in sales (Tine, “Marketing Proposal for Brand Extension in Japan and the US: The Nintendo TiiVii”) Products offered by Nintendo such as Wii are viewed as quite a value for money by both price conscious customers as well as image conscious customers. While the low cost caters to the price conscious client base, the good quality, new innovations and wide variety of games fulfills the needs of the image conscious customers. Its durability and usefulness are varied and flexible. Owning a Nintendo product such as Wii, DS is viewed by the image conscious consumers as an enhancement in their personal image. Emerging Needs of the Customers The needs of buyer change from time to time. Digital technologies such as High Definition movies, Digital photography, Mp3 music files and internet are increasingly gaining popularity among consumers these days, particularly consumers want all these technologies integrated into their gaming consoles. Now both hardcore gamers as well as casual gamers mainly want their gaming consoles to play realistic games with enhanced graphics such as high-definition video and audio, in addition want to play internet enabled multiplayer games, as well as want their consoles to be an audio and video entertainment system by playing movies, music, etc. Consequently, the gamers are not interested in playing alone anymore instead they prefer to play online with their friends and families. All the three major players are providing these whole gamut of features, only with minor variations. As discussed above, all these services provide similar gaming hardwares, and on the same lines they provides similar services including online playing mode, games download, streaming of movies and TV episodes, etc. As far as streaming of movies and TV episodes are considered, Nintendo leads the pack because of its partnership with leader in video rental and home entertainment needs, Netflix. Although, the other two also has partnership with Netflix, Nintendo has widespread access, with PS3 also connecting to Sony’s online movie store through a Blu-ray disc player and Xbox 360 having access to the Zune HD movie library. (Mihaela). Changing Strategy of Nintendo In the early 2000s, Nintendo’s fortune in the game industry market faced a steady decline. The sales of Sony Playstation 2 and Microsoft Xbox outpaced the Nintendo. The reason of such a drastic fall was that they thought the gamers would play whatever they create. As a result, it caused the abandonment of Wii entirely. Nintendo recognized its mistakes and decided to make radical changes. Nintendo thus re-developed the gaming system again. They improved the ‘playability’ by developing better graphics, better performance and better sound quality and thus provided more fun to the gamers while playing. They introduced wireless and motion sensing controller and also created infinite options that made game much more rational and user’s game experience much more pleasurable. Nintendo realized its past mistakes when aiming for a target age group, i.e. younger customers; therefore they changed their targets and entered a complete new dimension. Nintendo started to tap into the “casual gamers” group. Presently, they are trying to reach far beyond “hard core gamers” which the Xbox 360 and the PS3 are targeting directly. Nintendo also developed new gaming packages which allowed hours of entertainment such as bowling, baseball, tennis and golf. Such types of games are also suitable for mobile system (Gorman, “Area Marketing Estrategioco”). Buyer’s Bargaining Power Almost all families or individuals are the buyers of Nintendo products. As pointed out earlier, this is in contrast to the PS3 and Xbox 360, who have focused on a specified target market. With Nintendo having a larger base, even if a buyer purchase one console at a time, it will lead to mass buying. Since the retail price is already provided for any product over entire regions or countries, individual customers do not have any bargaining control over the product (Conrod & Szwaykowska., “Competitive Strategy in Game Consoles”). The same is the case with Microsoft Xbox and Sony’s PS3, as these companies set a fixed price, and advertise it in all its mediums from its official websites, exclusive stores, etc. So, bargaining power of the buyers are reduced. References Benedetti, Winda. “Kinect vs. Move vs. Wii: Fight!” MSNBC, 23 Nov 2010. Web. 15 April 2011. Conrod, Jay. & Szwaykowska, Klimka, “Competitive Strategy in Game Consoles”. February 09, 2011. R. Preston Mcafee, 2007. Gorman, Patricio O. “Area Marketing Estrategioco”. February 09, 2011. Palermo, 2008. Icmrindia. “Introduction”. February 09, 2011. Nintendo Wii: A 'Revolution' in Gaming?, 2007. “Kinect Sensor with Kinect Adventures”. n. p, n. d. Web. 15 April 2011. Mihaela. “Netflix streaming on Nintendo Wii.” The HD Standard, 19 Jan 2010, n. d. Web. 15 April 2011. Nintendo. “History of Nintendo Worldwide 1889-1979”. February 09, 2011. About Nintendo Worldwide, 2008. Nintendo. “Legal Information (Copyrights, Emulators, ROMs, etc.)”. February 09, 2011. Legal, 2010. Pilcher, Erin. & Et. Al. ”Nintendo Wii”. February 09, 2011. Wartburg College, 2009. "PS3 VS Xbox 360". PS3 Vault, n. d. Web. 15 April 2011. "Sony PlayStation". Think Box, n. d. Web. 15 April 2011. Tine, Stephanie. “Marketing Proposal for Brand Extension in Japan and the US: The Nintendo TiiVii”. February 09, 2011. University of Connecticut, 2010. Read More