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Nintendo Marketing Strategy Essay

4102 words - 17 pages

Index

Introduction ………………………….……………………………………….……3
Industry analysis ……………………………..………………….……...…......4
Competitors strategy ……………………….…………………………………….
Microsoft – A differentiator………………………….…......7
Sony – A differentiator ……………………….…………………9

Analysis of competition………………………………………………………11
Nintendo’s strategy …………………………………..……………………….14
SWOT ………………………….…………………………………………………….17
Recommendations …………….………………………………………………18
References ……………………………..………………………………………….20

Introduction

The first video game was created in the 1960's. Half a century later, the industry of video games represents a  42 billion Pound industry. The recent significant increase in this industry is due to ...view middle of the document...

 
  
This report analyses Nintendo's global situation, its competitor's strategy and finally  Nintendo strategy.

Industry analysis
The Porter’s Five Forces model is a tool that companies use to analyze competitive forces in the industry environment in order to identify opportunities and threats. This model focuses on five forces that shape competition within an industry. These forces are: risk of entry by potential competitors, rivalry among established firms, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitutes (Theory of strategic management with cases, Jones Hill, international edition, p.42).
For Porter, a strong competitive force can be viewed as a threat as it reduces profits while a weak competitive force results in an opportunity which allows a company to earn superior profits.

Porter’s Five forces for Video Games industry :

Potential new entrants (high):
For the potential entrants, there are Electronic arts, mobile phone manufacturers such as Apple and computer manufacturers
Electronic Arts creates software for PC’s and console gaming and EA is one of the major player in software industry. For instance, over the past three years the average company in the industry has seen an 8% increase in their stock price, whereas EA has increased by 123%. The following example shows the strength of position that EA holds and can compete with Nintendo which develop a part of its software, but also uses independent. (the video game industry, an industry analysis, from a VC perspective / center for digital strategies, 11 march 2005)
For mobile phone, the threat comes from Apple and the multiplication of applications and video games on phones. Moreover, a major part of this software is free unlike Nintendo’s products. (Analyzing Apple's Threat to Sony, Nintendo by Brian Caulfield, 29/09/2009)
The console market has a strong threat of new entry. Indeed, there is very little patentable technology in game consoles, and most consoles have similar features (Competitive Strategy in Game Consoles by Jay Conrod, Klimka Szwaykowska, 7/03/, 2007)

Power of buyers (low) :
The power of buyers is low in this industry. Indeed, customers in this market are almost all individuals or families who purchase consoles from Nintendo through retailers (e.g. Tesco, World of Games) but manufacturers suggest retail prices over entire countries, so individual customers have no bargaining power.
Also, Software purchased for one console cannot be played on other consoles so switching costs is high. (Competitive Strategy in Game Consoles by Jay Conrod, Klimka Szwaykowska, 7/03/, 2007)

Competitive rivalry (High) :
For the Competitive Rivalry, there is a strong rivalry between Nintendo, Microsoft and Sony. The product diversity is low and the most significant difference between the consoles is in the games available for each. Therefore, the competition is concentrated on price and in this battle, Nintendo is the...

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