1. SONY: BETTING IT ALL ON BLU-RAY Prepared by, Sunil Chhajar
2. Q1.Classify the high-definition DVD market using the product
life-cycle framework. Based on this analysis, what objectives and
strategies should Sony and the other competitors pursue ? Are any
of the competitors deviating from this formula?
3. Product Life Cycle Time Product Develop- ment Introduction
Profits Sales Growth Maturity Decline Losses/ Investments ($) Sales
and Profits ($) The course that a products sales and profits take
over its lifetime
4. Product Development: When the company finds and develops a
new-product idea . During product development, sales are zero and
the companys investment costs mount. Introduction:It is a period of
slow sales growth as the product is introduced in the market.
Profit is nonexistent because of heavy expenses of product
introduction. Growth: It is a period of rapid market acceptance and
increasing profits Maturity:It is a period of slowdown in sales
growth because the product has achieved acceptance by most
potential buyer. Decline: It is the period when sales fall off and
The time this case was written, the technologies were just
being introduced to the market. High Definition DVD were than in
the introductory stage of the product life cycle. But this changed
quickly over the course of 2007 and 2008. Now , the product is
going through the growth stage.
A period of slow sales growth .
Low to non-existent profits.
Given an end to the introductory stage and starting of growth
stage, the companies involved should be doing the following:
Spending heavily on promotion and advertising.
Promotion should be focused not only on informing consumers but
also creating brand preference through differentiation and
expanding market share.
In the growth phase, companies should invest heavily in
expanding distribution networks.
This situation is unique, given that each side is backed by a
coalition of corporations that span the supply chain, even
including entertainment content companies.
Thus, there is a heavy emphasis on getting the players
distributed as well as having a strong distribution of content that
will be playable on the players.
As far as pricing goes,
Skimming and a Penetration strategy are appropriate for
introducing a product.
In growth stage the company must continue to penetrate the
markets for mass awareness and mass reach.
Based on the information in the case, Toshiba, the first to
market, has two models while Pioneer has only one.
In order to maximize the market share the company must
8. Q2.As sales of the new DVD players increase, what will
happen to the characteristics of the home video market and the
strategies employed by Sony and other competitors?
9. CHARASTERISTICS 1.SALES
INTRODUCTION 1.LOW SALES. 2. HIGH COST PER CONSUMER 3. NEGATIVE 4.
INNOVATIVE 5.FEW GROWTH 1.RAPIDLY SALES. 2.HIGH COST PER CONSUMER
3.RISING PROFITS 4.EARLY ADOPTERS 5.GROWING NUMBER MATURITY 1.PEAK
SALES. 2.LOWCOST PER CONSUMER 3. HIGH PROFITS 4.MIDDILE MAJORITY.
5. STABLE NO. BEGINNING TO DECLINE DECLINE 1.DECLINING SALES 2. LOW
COST PER CONSUMER 3.D ECLINING PROFITS 4. LAGGARDS 5.DECLINING
HOME VIDEO SYSTEMS ARE IN THE DECLINING STAGE.
SALES : DECREASING .
PROFIT :DECLINATION .
COST :LOW COST PER CUSTOMER.
COMPETITORS: GROWING NUMBERS.
11. STRATEGIES 1.PRODUCT 2.PRICE 3.DISTRIBUTION 4.ADVERTISING
5.SALESPROMOTION I NTRODUCTION 1.OFFER BASIC PRODUCT 2.USE COST
PRODUCT 3.BUILDSELECTIVEDISTRIBUTION 4.BUILDPODUCT AWARENESS AMONG
EARLY ADOPTER 5.USE HEAVY SALESTO PROMOTION ENTICE REATIL GROWTH
1.OFFER PRODUCT EXTENSION AND SERVICE 2.PRICE TO PENETRATE MARKET
3.BUILD INTENSIVE DISTRIBUTION 4.BUILD INTENSIVE DISTRIBUTION
5.REDUCE TO TAKE ADVANTAGE OFOF HEAVY CONSUMRE DEMAND MATURITY
1.DIVERSIFY BRAND AND MODEL 2.PRICE TO MATCH& BEAT COMPETITOR
3.BUILDMORE INTENSIVE DISTRIBUTION 4. STRESS BRAND DIFFERNCES AND
BENEFITS 5. INCRAESE TO ENCOURAGEBRANDSWITCHING. DECLINE 1.PHASE
OUT WEAK ITEMS 2. CUT PRICE 3. GO SELECTIVE PHASE OUT UNPROFITABLE
OUTLETS 4. REDUCE TO LEVEL NEEDEDTO RETAIN HARD CORE LOYALS 5.
REDUCE TO MINIMAL LEVEL
The strategy adopted by Sony and other competitors are as
DISTRIBUTION : Sony has conquered the distribution chain which
was again a strategic key factor as it was in the original
VHS-BETAMAX confrontation. This time Sony won in both the
distribution of players and rented movies. Distribution strategy
therefore remains as a critical component.
CONSUMER CONVENIENCE : One of the strategy adopted by Sony and
the others was consumer convenience. In this various additional
features like Wi-Fi facility and memory slots were provided with
PlayStation 3. This helps in value-buying for the customers.
SUPPLIERS -Positioning the offering with the suppliers is as
important as positioning offering with customers. The suppliers in
this case were the content providers- the movie studios. Warner
Brothers support for Blue-Ray and Paramounts shift of allegiance
from HD-DVD to Blue-Ray were killer blows for Toshiba.
13. Q. 3 Analyze the development of Blu-ray and HD DVD
according to the stages of new product development process?
14. Theoretical Framework
15. Data from the case
Blu-ray and HD DVD formats emerged as front runners.
HD DVD players priced at $499 and Blu-ray players priced at
Pioneer went for 1080P progressive scan technology as compared
to Toshibas lower priced technology.
Blu-ray could contain 200 GB versus HD DVDs 90GB of data.
Toshiba camp focused on accelerating product adoption through
penetration pricing and Sony camp used diffusion of innovations
thereby targeting early adaptors.
Both the camps decided the products specifications in a manner
they thought would be most viable technically and
Convincing content makers and sellers to market their
Market testing was not done properly.
17. Q4. Who are the current combatants in the battle for the
home video market? Who will they be in five years?
CURRENT COMBATANTS IN THE BATTLE OF HOME VIDEO MARKET
BLUE-RAY - Backed by Blue-Ray Disc Association, a coalition of
companies that includes Sony, Hitachi, Pioneer, Philips, Panasonic,
Samsung, LG, Sharp, Apple, HP, and a host of other companies.
HIGH DEFINITION DVD-Supported and commercially backed by
Toshiba, Sanyo, Kenwood, Intel, and NEC, among others.
CABLE COMPANIES/PROVIDERS-More consumers are giving preference
to on-demand, nonphysical media,including online video and
video-on-demand television. Internet video is also catching up
giving a tough competition with 46% of online consumers now
watching movievia the web.
EXISTING COMPANIES Companies who are part of either the
Blue-Ray Disc Association or the HD DVD coalition are also
competing either directly or indirectly with their own physical
formats. E.g. Apple and Microsoft.
FUTURE COMBATANTS FOR THE HOME VIDEO MARKET
IPTV Internet Protocol Television (IPTV) is a system where a
digital television service is delivered using Internet Protocol
over a network infrastructure, which may include delivery by a
broadband connection. Tough competition can be expected from this
segment in the near term.
SATELLITE OPERATORS Thisinclude Direct TV, Echo Star, etc.
which is expected to have market share of around 30%.
3G -3G refers to third generationof mobile phone standards and
technology.3G networks are wide area cellular telephone networks
which evolved to incorporate high-speed internet access and video
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