P&G selling format 3
Company and industry analysis 4
External environment 4
Internal environment 5
Corporate objectives 5
Marketing strategy 6
Targeting, segmenting and positioning the product. 6
Distribution (Place) 9
P&G selling format
Microsoft is a leader in the software and hardware development industry. We will focus on the entertainment division of their operations, as it is a growing segment within their company. The games consoles industry is also projected to grow until 2016 and has a good entry potential, as the threats of new entrants, substitutes, buyer and supplier power and industry rivalry are moderate.
- The Idea
The company wishes to launch a new game console including a virtual reality helmet, as well as additional differentiated content such as on-demand movies, TV shows and music.
- How it works
The new Xbox system (console and helmet) is a revolutionary product making the gaming experience as realistic as possible. It provides the customer with a unique, customised experience, which makes it very valuable in today’s entertainment industry.
- Why it’s right
“Outside the box is where the future will be created” : virtual reality is finally accessible thanks to the recent rise in technology. The use of on-demand music, TV shows and movies through partnerships, alliances and licensing with companies such as ITunes and Netflix will also help further differentiate the product from its competitors and appeal to many different customers. The new Xbox system will show convergence: “uniting audio, video and data communications into a single source, on a single device, delivered by a single connection.” Previous game consoles have been very successful, and sales of Microsoft’s Xbox 360 overtook Sony’s PS3 sales in 2011, this new innovative console will be very successful amongst its target audience of young adults, families and gamers in general.
- Next steps and timing
The next steps will be building an advertising campaign for the new game console, through the use of offline and online levers. The campaign should begin in the year preceding the launch of the console, with new advertisements released periodically, both online and offline.
Company and industry analysis
The Microsoft Corporation develops hardware, as well as software products and services, and is one of the leaders in the industry. For the purpose of this assignment, we will focus on the entertainment division of the company’s activities, and more specifically, games consoles. In 2011, Microsoft recorded a 40% increase in revenues from its entertainment and devices division compared to 2010, totaling $8,716 million in revenues. Key products of this division are the Xbox 360 and Kinect, which provide children, families and individuals in general with entertainment.
There has been 5% growth in the games consoles industry in year 2011, and the growth rate is expected to increase to more than 6% in year 2016. Market value was estimated at more than $26 million in year 2011 (see appendix 1). The main countries in which Microsoft and competitors operates regarding games consoles are: North America (42%), Europe (40%) and Asia-Pacific (14%), (see appendix 2). The market is attractive, especially for Microsoft, as they entered the market in 2000 with the first Xbox model, and are now one of the three main players on the market, alongside Sony and Nintendo. Recently, Xbox 360 sales overtook Sony’s Playstation 3 sales. However, the Wii still boasts most overall sales.
Overall, there is a moderate degree of rivalry within the industry, new entrants should not be considered as a threat to companies such as Microsoft, and buyer and supplier power are limited. Diversifying, especially through the development of online sales is essential for all leaders in the industry who wish to maintain growth.