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Course : Master of Science (M.S.) in Management

Subject : Marketing Management

Assignment : Group case 1 (Sony)

Due Date : 4 February, 2011

Submitted by:

Submitted to:

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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? …………………………………………. 7

3. What recommendations would you make to senior marketing executives going

forward? What should the company be sure to do with its marketing? ……………………… 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 world’s 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 80’s when they brought out Betamax for VCR’s to counter

JVC’s 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. Sony’s 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 80’s 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, Sony’s 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 CEO’s 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 couldn’t 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

Sony’s 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 Sony’s products. From Betamax, MiniDisc, PlaySation series, Bravia and Blue-ray, Sony’s 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 Sony’s 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 Sony’s 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 Sony’s

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.

Sony’s 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?

Sony’s 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 wouldn’t 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