Principles of Marketing

Lecturer : Dr. Norbani Che Ha

Case 5

Reviving a Company, Transforming a Market

by
1-Intan Nur Farina Binti Rahmat CEA090144 
2-Nur ‘Inani Binti Rahmat CEA100137
3-Nur Haziqah Binti Zulkifli CEA100138
4-Noraidah Binti Nurmin CEA100136
5-Lim Ming Huei CEB100099
6-Fatin Nadzirah Binti Abu Bakar CEB 100017
7- Lee Jia Yi CEB100098

Question 1
Was Nintendo just lucky, or does the Wii’s success have strategic merit?

Nintendo’s luck not just happens out of the blue. It takes several months of planning

and development before it hit the market. Strategic marketing is carefully planned so that

the final product meets the customers’ preferences.

To make sure Wii enters the video games market successfully, Nintendo focused on

the customers first. When it realized that it could not compete against technologically

superior products like the Sony’s PS3 and Microsoft Xbox 360, Nintendo focus on something

that the others were ignoring. Its new concept is taking step back by focus more on the fun

of playing rather than cold tech specs. This will bring more attractions for traditional games.

A lot for features, new application and variety of games were added in this new revolution

such as the Wii Fit and Balance Board. Releasing hit after hit, Nintendo has been placed first

in the “Innovative in Responding to Customer Needs” category.

Moreover, Nintendo has broadened its segmentation. It is not just targeting 18 to 35

years old hard-core gamers and children or teenagers, but also other family member.

Although the product is still new in the market, it will target the new adopters. These new

adopters will continue to buy, and later buyers will start following their lead, especially if

they hear favorable word of mouth. Buyers will attract their family and friends, since Wii can

be played by up to four persons. The words about the game will easily transferred in this

way because of the experience they learned from playing this fun game.

Nintendo brought the revolutionary of video game when it introduces Wii. Using the

console, users can play tennis, go bowling, and hit the links by swinging the controller like a

racket, ball, or golf club, all with characters resembling themselves. These can be played by

multiple players, which can strengthen the relationship among the players. Furthermore,
Wii Fit is an interesting game to play since the game pad called Balance Board is introduced.

Users can do aerobic, strength training, balancing, and yoga exercises all in realistic virtual

settings. This game stress on not just only uses your fingertips and brain to function but your

whole body to move.

Question 2

Has Nintendo put the “fad” question to rest? State a case as to why the Wii is or is not here
to stay.

Fad brings the meaning that temporary periods of unusually high sales driven by

consumer enthusiasm and immediate product or brand popularity. For the case of

Nintendo’s product, it was not a fad, but a better and stronger product in the market.

When Nintendo product like Wii is first introduced to the market, it immediately

receives an enthusiastic response from the gamers market. However, it doesn’t mean that

Nintendo’s product will undergo fallen of sales. The sales of Nintendo were remaining highly

for quite a long time at the market. It was because that the Nintendo is willing to reinvent

what a video gaming system to continuous drive its sales.

Wii was published in resemblance of TV remote and enabling gamers to design or

create their own favourite avatars. With the configuration, the consumers can play various

types of games and sports with the remote. For example, playing tennis, bowling and golf by

just swinging the controller.

After that, the Nintendo continue to create news applications or features to their

product. An example of new innovation is that Wii can scan weathers, news and websites

through a wireless internet connection. Other than that, Wii Shop Channel is another proves

of innovation of Nintendo too.

Then, Nintendo continue to leap over their limits. A few new applications were

introduced by Nintendo to the market later. For instance, a plastic rifle contraption allows
users to realistically play their shooting games. Wii controller in a steering wheel had made

driving games more excited. Tiny in-controller speakers and touches made more effects.

All of these done by Nintendo which do not satisfy and content by what they

achieved. They want Nintendo’s product to have long product life cycle. Therefore they are

keep inventing and publishing new changing or appearance of the Wii. When a product is

having modification all the time, it will satisfy customer’s demand, remain their interest in

the product and keep a steady quantity of sales or even raise the sales.

One best and brilliant example of Nintendo product that shown Nintendo is not a fad

will be Wii Fit. Wii Fit, an add-on device targeted directly women wanting to lose weight or

to keep body shape. A game pad called Balance Board which lies at heart or say foot of Wii

portfolio of exercise application. Players can do aerobic; strengthen training, balancing, and

yoga exercise in all realistic virtual setting. The Wii Fit facilitates exercise programmes as it

tracks and analyzes individual performance over time as well as keeping track of stats like

weight and body-mass index.

Wii Fit had meet the customer need and demand that is women wanting to lose

weight and keep body shape. This idea comes to Takao Sawajo, general manager of

development for Nintendo when he watches the wrestlers being weight for in a television

match. The manager has an idea about the possibility of tracking users’ weight on game

pad. It had been realised by the team of Nintendo. By the balance board, users can do

exercising at the same time of playing and enjoying the fun of the game. Other than that, it

enables users to analyze their BMI (Body Mass Index). If they are overweight, they can set

their target weight loss and the duration into the Wii Fit. By this, Nintendo had shown their
intelligence in catching customers wants and it was the reason it will success and have a big

part of pie in the market.

Furthermore, Nintendo is willing to do things differently. The idea of Takao Sawajo is

completely fresh, new and never be implement by any other company or organisation. This

program manages to let people playing beyond the fingertips controlling part of game but

using the whole body. Nintendo do not have any competitors or examples to be reference

as carrying out the experiment. They might fail as the condition of customer taste and the

flaming competition. The Nintendo facing high risk and might be failure in bringing this idea

to the reality. Yet, Nintendo’s top management decide to do it. Nintendo’s courageous had

put them and Wii Fit into success. Nintendo had places the second overall after several

years falling out of top 10.

Next is the creative and innovative of the Nintendo. Nintendo is always thinking

something new to put in their product. Modification of the product will ensure one’s

product staying at the market for a longer time. For now, Nintendo had created Wii Fit as a

product help people to keep fit by scaling their standard weight. Moreover, news games

such as Ski jump and slalom games had been introduced. It will attract more potential

customers to be the users of it. In the future, the Nintendo may just bring in limitless

number of applications for Wii Fit. It’s only a matter of time before Nintendo develops

Balance Board version for every spot imaginable. This continuous of creation and innovation

will ensure Wii Fit to lead the market for a long time.
Question 3

In which stage of the product life cycle is the Wii? Based on that stage, is Nintendo
employing good marketing mix strategies?

Wii is in the growth phase. This can be proven in each of characteristics of growth

stage which are sales, costs, profits, customers, and competitors.

The sales of Wii is rapidly increasing where Nintendo had sold over 24 million of Wiis

in its first 18 months, beating Xbox sold only 19 million units which had been on the market

a full year longer and Sony, once the undisputed industry champ, placed only 12 million

PS3s. the cost of each Wii is only $250 and still can bring profits to the company, compared

with $599 for each PS3 and Sony was still losing hundreds of dollars on each unit that it sold.

Wii had increase the revenue by 73% and profits up to 67% last year. Wii is targeting early

adopters which will then directing to the whole family to play. These will ease the

expenditure of the marketing. Unfortunately, the profits gained will lead to the growing

number of competitors. Sony and Microsoft are trying to catch up by developing easier-to-

play games that depart from their usual fast-action fare.

In the phase of growth, Nintendo offered product extension. From a basic motion

sensing technology, it provides extension of the product. For example, the new facilities of

wireless internet connection and Wii Shop Channel. Other than that, Nintendo continue to

bring new applications for Wii product such as plastic rifle contraption, tiny in-controller

speakers and touches and Wii controller in steering wheel. Varieties of extension introduced

by Nintendo in this stage enable the increasing of sales and at last reach the target of

growth phase, maximizing market share.

 For Wii, it was a combination of low-powered processors and a standard optical disc

drive. Compared to the powerful, state-of-the-art chips and high-definition lasers contained

in the PS3 and Xbox360, the Wii had a cost advantages. Microsoft and Sony had priced their

offerings in the stratosphere. Each unit of Sony PS3 was priced $599 and it was still losing

hundreds of dollar. Yet Nintendo Wii with a low tech approach enables low cost. Nintendo

sells the product at $250 and it bring a hefty earn for the company.

At this phase, Nintendo build an intensive distribution. This was due to the demand

is rising drastically, sales of the Wii are increasing rapidly, cause the stocks needed is high in

each of the shop. However, the sales of Wii is too high until it experienced two years of

nonstop stock-out and Wii outsold the Xbox360 by two to one and the PS3 by three to one.

Nintendo is building the customers awareness and interest about the Wii by mass

market. On launch day of Wii, Nintendo midnight events, held in New York and Los Angeles,

were attend by large amount of consumers, with coverage by media ranging from AP to

MTV and Good Morning America. This showed the large scale of advertising Nintendo is

having. By this Nintendo had successfully building consumers’ awareness and interest about

their product, Wii.

Nintendo had launch variety of promotion in order to promote the Wii. They spread

information through MySpace and blogs. Other than that, they also organised the Wii PR

campaign by the purpose of promote Wii to the public and build relationship with their

potential customers. As a result, the Wii public relation effort was named PRWeek’s2008

Consumer Launch Campaign.

Question 4

Develop a strategy for the Wii’s next product life cycle phase.

Wii’s next product life cycle phase is Maturity stage. Maturity stage is when the

product’s sales growth will slow down. This stage is normally lasts longer than the previous

stages, and poses strong challenges to marketing management. The slowdown in sales

growth results in many produces with many products to sell. In turn, this overcapacity leads

to greater competition. Competitors tend to mark down prices, increasing their promotion

and advertising, and upping their product development budgets to find better versions of

the product. In Nintendo case, its competitors are Sony and Microsoft.

To overcome those situations from folding Wii, the managers and those involved

have to take serious actions in actually evolving to meet changing consumer needs. They

should not just depending on the mature product, they should consider modifying the

market, product, and marketing mix. These will attract new users’ interest and maintain old

ones.

The price of the product Wii should also be decreased to beat other competitors.

Although the current price is much cheaper than other brands, they should consider the

needs and purchasing power of the consumers. Lowering the price might help the

unfortunate ones to experience this interesting product. But not too low as it will decrease

the standard of the product and will fail the product positioning.

Wii should also build more intensive distribution to avoid insufficient stocks. They

can place the product in more video games shops and electronic departments. These will

make sure nonstop stock-outs and strengthen the market.

 For promotion and advertising, Nintendo and Wii should increase their advertising

campaign and aggressive sales promotions by trade deals, cent-off, premiums, and contests,

in order to compete with competitors and maintaining its spot in the market. Online

advertising should be considered as the numbers of online users are increasing these days.
Question 5

Discuss the potential threat to Nintendo’s future success. What will help Nintendo avoid a
premature decline for the Wii?

Potential threat to Nintendo’s future success.

1. Competition

For Nintendo, it has two major competitors that are Microsoft’s Xbox 360 and Sony’s

Play Station 3. As Nintendo’s Wii products had successful in its attempt into the market, it

also manages to smash its competitors greatly. Both of these two competitors which used to

lead in front of Nintendo found that they must catch up. These two companies are changing

their strategies in gaming field. At first they are concentrating in true high-definition images

and sound on their games, and the gaming system is more complexible. However, they are

started putting more recourses and financial resources in developing easier-to-play game.

This means that Nintendo is going to face great competition in the future with Sony and

Microsoft. If Sony and Microsoft successfully created games or application that can compete

with Nintendo, then Nintendo will be facing a serious threat.

2. Technology

To be creative and innovative, producers are always ready to modify their product and

services. Modifications of product always need to be done by R&D (Research and

Development). Most of the new developments involve new technology.

Previously, the Nintendo leading the market for long time until Sony and Microsoft .They

come in with high technology and successfully replaced Nintendo. After that, Wii used a

different way in modify their products. It took a step back from technology arms and
chooses to focus on the fun of playing games instead of cold technology spec as Sony and

Microsoft. It had success but now the Nintendo is going to do more, it plans to run the

industry’s most advanced games. Since the Wii is not technologically superior, it may not be

a long-term advantage for Nintendo. On the other hand, Sony and Microsoft are well known

of their powerful, state of the art chips and high definition lasers. Thus, it will be a threat for

Nintendo in the future.

3. Economics condition

Usually, the demand of the market is depending of several reasons and economic

conditions are one of the most effective factors. During economics recession, the buying

power of the consumers will decline. It directly causes the sales of Nintendo’s product to

decline too. People will spend more money on their necessary but less on entertainment.

Other than that, when inflation happen, the price of goods will rise and indirectly cause the

cost of product rise also. This will affect the profit earned.

Preventing premature decline of Wii.

It seems to be a great challenge for Nintendo in order to face the threats. To remain

keep a big part of pie in the market, Nintendo have to do something to prevent premature

decline phase will occur.

1. Develop more attracting features and applications

If Nintendo just content with the results they gain, they might face risk of having hard-

core gamers lose interest. Instead of that, they should try to keep the gamers interest. This

is always the responsibility of Research & Development Department to find out what type of
new applications is available. Nintendo has been always creative and innovative in

developing news application or idea. After it invent so much application like as semblance of

TV remote, Wii Shop Channel and Wii Fit which grab consumers’ attention and interest,

Nintendo need to find out more advanced games or application that will keep the customers

loyalty to the product and the brand.

1. Customer service centre

As the first awarder of “Innovative in Responding to Customer Needs”, Nintendo should

understand well the customers’ needs, wants and demands. In this place, customer service

centre play an important role in it. They can get the feedback from their customer. Next

they can collect and analysis the trend of customer preference. Nintendo may think of some

modification of product service or market due to the feedback. At last, they may produce

something that can meet customer satisfaction.

2. Nintendo may broaden the market segmentation

One strategy that Nintendo can take is to broaden their market segmentation. Just like

what the Nintendo did now, part of its future strategy is to focus on more serious gamers.

To reach the new target market, a detail research and report is needed. After setting new

market segmentation, they need to arrange strategy of marketing mix well to promote their

product to the market and reach the customers efficiently. By broaden the market

segmentation, the sales of product might rise and it can solve the treats that might be face

by Nintendo.