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Marketing Audit
Group: MMK1 L Laura Jane Willen (117544) Esra Toker (117013)

Marketing Audit Laura Jane Willen, Esra Toker

Management Abstract
This marketing audit is concerned with the marketing analysis of the company Nintendo It analyzes in detail the macro and meso environment of the gaming company Nintendo as well as the current marketing strategy of Nintendo in regard to the gaming console Wii. With the help of the PESTEL model, political, economical, socio-cultural, technological, environmental and legal factors influencing the company within the Netherlands are explained. The Netherlands, being a political stable member of the EU, has strict policies regarding businesses. The current economic recession has a strong influence on the company by affecting buying power of customers. Demographics show that the Dutch population is aging while the technological progress is becoming faster. The Netherlands are very aware of the necessity to protect the environment and try to educate the population in that regard. Legal factors influence the company via trademarks, copyrights, licensing, etc. The task environment of Nintendo includes competitors, suppliers, shareholders, customers and distributors. All stakeholders contribute to the success of the company and are valued highly. Nintendos current marketing strategy follows its mission. The desire to broaden the gaming audience is served by an extensive promotion strategy, a low price, wide distribution and a product with innovative features. The target group is defined by psychographic, behavioural and demographic factors. With its current positioning strategy it differentiates itself in consumers perception from its two main competitors by price and environmental friendliness. The end of this marketing audit analyses the different aspects according to the SWOT-model. Here the before given information are used to give some conclusions about the strengths, weaknesses, opportunities and treats. The information in this model shows the current situation of the company with some points to improve in order to have a successful status in the gamer industry.

Marketing Audit Laura Jane Willen, Esra Toker

Table of Contents

Introduction .............................................................................................................................. 3 1. Product and Company ......................................................................................................... 4 2. Macro Environment .............................................................................................................. 4 3. Task Environment ................................................................................................................ 6 4. Current Marketing Strategy .................................................................................................. 7 5. SWOT-Analysis .................................................................................................................... 9 Conclusion ............................................................................................................................. 10 Appendix ................................................................................................................................ 11 Bibliography ........................................................................................................................... 13

Marketing Audit Laura Jane Willen, Esra Toker

This second part of the Marketing Plan is concerned with the marketing analysis of the company Nintendo. Desk research was undertaken to find specific information about influences on the company within the Dutch market and also explains the current marketing strategy of Nintendo in regard to the gaming console Wii. This report therefore serves as a base for future analysis of the company Nintendo. After a short introduction to the company and its current product offering, the Wii, the macro environment will be analyzed with the help of the PESTEL framework. Then, the meso environment is taken a look at with general information about the market and the companys stakeholders. After that, the companys mission and vision are explained followed by an analysis of the current marketing strategy. The report will be concluded with a SWOT analysis to clarify the strengths, weaknesses, opportunities and threats that the soon to follow marketing plan will be based on.

Marketing Audit Laura Jane Willen, Esra Toker

1. Product and Company

Nintendo Co., Ltd is an international video game company headquartered in Kyoto, Japan. It was founded in 1889 as a card game manufacturer but became successful in the electronic game business in the late 1970s. Today, Nintendo is one of the biggest and best-known firms within the gaming industry. (Nintendo Co. Ltd., n.d.) The Wii, is the newest and most advanced stationary gaming console by the company at the moment. It was introduced to the market at the end of 2006 and became an instant success, selling more than 72 million units up until now. Its main feature is a new controller that is similar to conventional remote controls, but has built-in motion sensors. These register the position and movement of the controller in the room and put them into corresponding movements of characters or elements to the screen. (Nintendo, n.d.)

2. Macro Environment
The macro-environmental analysis will be done with the help of the PESTEL framework model. Political Influences, which can be categorized into the political factor, include taxation policies, foreign trade regulations and social welfare policies. As Nintendo is an international company, it has to be aware of different (especially Dutch) political regulations and policies. The Dutch government is a parliamentary democracy with the Queen as the head of the state. The government has strong implementation policies. The EU backs the government for all political decisions and being an EU member, the Netherlands is strongly supervised in regard to policies. Presently, the main focus of the government is the economy. The government aims to restore economic growth through tax cuts and decreased public spending in the face of an economic slowdown. The collapse of many banks has forced the government to intervene in the economy and it is expected to continue with this policy in the near future. This shows that the Dutch government together with the EU parliament exercise a certain influence on the business. It has the authority to control entities such as the contents of video games that are being published in different countries. Nintendo has to make sure that these regulations are being observed. (Datamonitor, 2009) Economical The economical aspect reveals interdependency between the company and the Dutch economy. The gaming industry constantly contributes towards the national GDP; this has an effect on the economical situation of the whole country. Therefore, the video game industry forms an important part within the economy. On the other hand, the economy also has an effect on companies like Nintendo. The Netherlands have a well developed economy with strong infrastructure. It has been a free-market system for the last two decades, and the government has keenly reduced its role in the economy to regulation and taxation. In 2009, the country was troubled by the general global slowdown and increasing problems in labor inefficiency and the downward trend of the economy has continued in 2010 with a deepening recession. Yet, it can be expected that unemployment rates will come down and the trade surplus will broaden, i.e. Nintendo can expect growing consumer spending in the near future. The quantity on consumers disposable income, which is directly affected by the economic situation, has an effect on their buying behaviour and hence affects Nintendos profits. This means that the Dutch economic situation is highly relevant for the marketing of the Nintendo Wii. (Datamonitor, 2009)

Marketing Audit Laura Jane Willen, Esra Toker

Socio-cultural The socio-cultural aspects, which have to be taken into consideration, include population demographics, income distribution, lifestyle changes, social mobility, attributes to work, consumerism, level of education and consumer behaviour. Each aspect has a direct influence on the performance of the company. The low fertility rate in the Netherlands presents a significant challenge, as the country is faced with an increasing elderly population. The slackening fertility rate in the Netherlands is leading to an increase in the aging population, which is further emphasized by the declining mortality rate. It is anticipated that between 2007 and 2012 the population aged 65 and over will rise from 14.4% to 16.2% of the total population. The Dutch pension system consists of both old-age pension provisions and early retirement schemes. The pension system provides an incentive to retire at exactly the age of pension eligibility, and many workers take early retirement schemes. As a result, there has been a tendency to voluntarily retire to take advantage of the pension benefits, despite having the capability to work. (Datamonitor, 2009) Technological Technological efforts taken in the gaming industry always attempt for competitive advantage. Although innovation is restricted, the speed of technological chance is very high. In the past, technological progress increased hardware costs and discouraged innovation. The WiFI capability of Nintendo Wii was a major change in the technology of the video game industry as well as the wireless motion- sensitive remote controllers. The enormous speed of technological innovation has a great effect on the company. Nintendo must make sure to be up to date with the newest technology in order to satisfy the growing demand for better performance and more interesting features. (Datamonitor, 2009) Environmental The environmental aspect of the framework aims at the ecological awareness of both company and consumer. The current video game industry uses a lot of plastic resources and playing games consumes a lot of electrical power. Nintendo should therefore ensure that their games utilize low power. Many parents all over the world are trying to teach their children to protect the environment and practice a green lifestyle. Being one of the major trade hubs in the EU, the Netherlands has strong policies in place with regard to waste management. The country also invests a lot of time and resources into educating people on the importance of environmental protection chaperoned by schools and other public institutions. The Ministry of Education, Culture and Science is principally accountable for environmental education and awareness in the Netherlands. With strong support from the government, environmental education and research has made stable progress in the country. However, there are problems with different environmental agencies failing to enforce strict regulations. (Datamonitor, 2009) Legal Legal issues that a company like Nintendo faces include trademarks, copyrights, licensing, online ownership, revenue recognition and demands of intellectual property, as well as product and health safety. The Netherlands has a well-developed licensing system, considered to be one of the easiest and least discombobulate systems in the entire EU. Many international companies have licensing agreements with Dutch companies, as there is no requirement of any registration for licensing agreements. Furthermore, there are no obligatory currency controls on the transfer of royalties and remittances for technical assistance. The Netherlands Competition Authority (NMA) is a special body regulating competition among the corporate entities. The NMA enforces fair competition in all the sectors of the Dutch economy and takes action against companies who participate in price-fixing cartels and who abuse a dominant position. A company like Nintendo needs to be aware of such institutions in order to be able to compete on the local market. (Datamonitor, 2009)

Marketing Audit Laura Jane Willen, Esra Toker

3. Task Environment
Market developments After entering the Product development area, Nintendo also wanted to develop the market. Therefore the company made research about how to reach more customers. The target group was widened and after creating Nintendo Wii within a new market it is possible to say that the company is fully working on diversification. (Kotler, 2008) Much more information about the whole gamer industry could not be found. Competitors The major competitors of Nintendo are Sony and Microsoft. Together with Nintendo, they form the so-called Big Three of the gaming industry. Sony has about 70% market share with Nintendo and Microsoft dominating the rest. The other small players like Sega, Vivendi and Universal Games, concentrate mainly on arcade games, which do not create a major threat to Nintendo. Sonys PlayStation 3 and Microsofts xBox 360 pose a major competition to the Wii. (Rosenberg,2009) Customers The group of people playing video games consists of an increasingly large group. Nowadays, the average gamer is 35 years old and has been playing for thirteen years. Yet, todays video game players include a diversity of students, employees, military troops, seniors, mothers and fathers. The band of multi-generational gamers has multiplied exponentially over the last few years, not least because of the introduction of the Wii. Thus, the current target group of Nintendo ranges from 3 years up to 110 years. The decision-making behaviour of a consumer within the video game industry is characterized by high involvement and is based on the views of opinion leaders. The influences that affect consumer buying-decision within the video game industry may be either the personal or the social factors. (Weber, 2007) Distributors and distribution channels Distributors play an essential role in the video game industry. They include the local store distributors as well as online distributors. Nintendo sells some of its own products online, but the majority is being sold is through other retailers. Stores such as Wal-Mart, GameStop and Amazon are trusted with selling Nintendo's products. (Moats, 2008) Suppliers As Nintendo does not manufacture all parts itself, the company needs firms who supply them with the needed quantities. It purchases from companies such as Panasonic (batteries), IBM (processors) and ATI (video cards). Nintendo tries to keep a good relationship with these firms to get low prices and fast deliveries. The fact that the company trusts in known brands shows that it intends to deliver the highest possible value to the customer with the help of good quality parts. (Nintendo Co, Inc., n.d.) Interest groups Interest groups within the company include shareholders, employees, suppliers, and customers. In order to maintain the position in the market, Nintendo must satisfy the needs and wants of all stakeholders. (Moats, 2008)

Marketing Audit Laura Jane Willen, Esra Toker

4. Current Marketing Strategy

Mission: Nintendos mission is to be the leading company in their industry and to expand the gaming audience. The focus lies on the attention to the customer and the respect towards them. The customers advise will give the company more opportunities to improve the products and services. Therefore, creating a good atmosphere between the company and the customer is very important. (Nintendo, 2010) Objectives and strategy: The basic strategy and the vision of Nintendo are to expand the worldwide gamer audience. The unique hardware and software should encourage the people to achieve this goal and will be expanded, too. With the new console called Wii, Nintendo changed the objectives. They want a further expansion with the help of Wii to give peoples life more fun, also with the whole family. In this case the physical condition should be enjoyable. Nintendo Wii is described as a machine that puts smiles on surrounding peoples faces. (Nintendo Co., 2008), (Towns, 2006), (Bremner, 2006) Marketing Mix 4 Ps: Product The brand Nintendo is well known and therefore there is high brand awareness. As can be seen in appendix 1, the Nintendo Wii is designed in a very modest way. It is possible to purchase this product in white and black color. The console itself is very innovative and easy to handle. The system is called motion-controlled gaming and it is also possible to connect to the Internet and download games etc. (Nintendo, 2010) The consumer will have a warranty for the Wii which is twelve months long. The company also provides an online service on their website the customer can contact to get help. (Solutions, 2008) Price The purchase price of Nintendo Wii varies between $120.00 and $199.00. The difference is that the second price includes two Nintendo Wii games. (, n.d), (Nintendo, 2010) The pricing strategy of Nintendo Wii is very great. There is no price flexibility, because the price is already on a very low level, far below the competitors prices. However, in the future the price may be further lowered. The producer does not offer the discounts directly and the producer discussed the transportation costs with the middleman. (Wii Mall Experience, 2007) Place Most local stores (retailers), such as MediaMarkt offer the Nintendo Wii. Another option is the online service, such as the own website, eBay, Nintendo Shopper or Amazon. (Nintendo Wii for Sale, n.d) Promotion In order to promote successfully the communication strategy has to be efficient. There is a "Wii Would Like To Play" campaign that is currently going through the media. Not many people were familiar with this kind of commercial at the beginning. Later Nintendo Wii made public, that this promotional strategy exists to target all ages, especially the mums, dads, grandfathers etc. The competitors are more focusing on a narrow target group, while that is not the case with Nintendo Wii. The promotion was therefore present in all areas of life to target all people: In television there were commercials, you could see some advertisements online, especially in community and social-network websites, because these sites are used by almost everyone. Furthermore, ads in magazines with different content and

Marketing Audit Laura Jane Willen, Esra Toker

different target groups were used to spread the information of "Wii Would Like To Play" with a connection to family en joyful life. Nintendos promotion strategy for the Wii resulted in the winning of the Grand Effie Marketing Award. (Kotaku, n.d) Segmentation, Targeting and Positioning The segmentation in Nintendo Wii does not focus on one area but on several ones. However the company does not focus much on the business-to-business market, but mainly on the business-to-customer market. As mentioned before, the video games for Nintendo Wii are regardless of the age, gender, language, culture but provide a joyful experience for everyone. (Nintendo Co., 2008) The gamers who have lost interest in playing games should be activated again. These are people who grew and have more responsibilities than before. Here the psychographic segmentation with peoples lifestyle is considered, which also reflects Maslows theory. The industry becomes a part of the social and esteem needs. Therefore, the company tries to be a part of someones life. Another part are people who enjoy the free games on MSN, Yahoo etc. These are males and females of all ages. This is measured with the behavioral segmentation. The people do not want to play complicated games but easy ones with fun. The third segment is the older market with the most money. New games, such as Brain Training or Trauma Centre are interesting for them. Demographics show that the population is aging and therefore this is the demographic segmentation with the variable age. These three segments: psychographic, behavioral and demographic were ignored by the gaming industry for a long time. Yet, Nintendo is focusing on them now. (My Nintendo New, 2006), (Kotler, 2008) The positioning map (Appendix 2) considers the price and the greenness (least emission during production) of the products. As positioned in the map, Wii has a relatively low price in relation to Xbox360 and Playstation3. The next cheapest on the list is Xbox360 by Microsoft and therefore this one is the nearest competitor in the price section. After that, the Playstation3 by Sony is in the ranking. Also the greenness shows a similar ranking. Nintendo Wii is positioned at the lower end, because it does not count to one of the green electronics manufacturers. The greenest one under these competitors is definitely Sony with the least emissions during production. (B., 2007),(Bremner, 2006), (GreenPeace, 2010)

Marketing Audit Laura Jane Willen, Esra Toker

5. SWOT-Analysis
The game console is first of all very innovative, because of its uniqueness, which gives more freedom to the gamer. It targets a wide range of people between 3 and 110 years. Both competitors developed new technology within the wireless and motion-sensitive controllers. Nonetheless, both Sony and Microsoft still focus on the younger target group. The openness of Nintendo towards broader audiences might entail a strategic advantage over its competitors. It is affordable for people with average or little income. The use of Nintendo Wii is very easy, because of the similarity of the menu with TV channels. Furthermore, many people can play the games directly at once. Hence, little children and elder people with weak skills can use it without problems. The development of motion sensing controls gives the people a new experience. The movement of the body will have a sportive effect and this causes healthcare while entertaining.

The product is not very environmental friendly. This means that the emissions during producing the product are high. Customers who care about their environment could be distracted from the Nintendo Wii because of this issue. The graphics of Nintendo Wii are far behind the competitors graphics. The Wii has 64MB GDDR3 and Playstation 3 has 256MB GDDR3 graphics. Due to the fact that the pricing is low there are low earnings per unit. Nintendo does not own the motion sensing software and therefore other companies can compete.

Focusing not only on B2C but also B2B consumer could widen the capabilities. The Nintendo Wii could be sold to retirement homes or some activity clubs for elder people. The movement with the console could count as sport and the healthcare institutions could support the product. The low price of Wii could cause an opportunity in selling more and having a higher market share. The emissions by producing the product could be hindered by making research how to avoid them. This would also lead to more satisfied customers, who care for the environment. Some design changes with the console and the Nintendo Wii could be made, so that it is even more easy for people to use the console.

The low price of Nintendo Wii could cause problems for the organization, because the hardware costs in general are very high. They have a short lifecycle. Due to the fact that Nintendo releases products in periods, they have to regulate the demand and supply. If shops were left sold out this would mean a loss of sales. The durability of the console is also one of the threats. The console can easily fall from the users hand, if the band is disrupted. The third party game support has stopped, because Nintendo gave limitations (e.g. no violence) for the features of the games they produced. This means limited selection of software. Due to the fact that the Nintendo Wii is not environmental friendly, competitors could be more attractive for the target group, because nowadays people try to use green products. (Gamegrap, 2006), (Moats, 2008)

Marketing Audit Laura Jane Willen, Esra Toker

The Analysis about the internal and external environment of the company Nintendo Ltd. gave information about the Macro environment, as well as about the marketing strategy. The information got by these analyses helped to come to the conclusion that there were the strengths, weaknesses, opportunities and threats. The internal environment with the marketing strategy gave the information about for example the strength that the number ob the target audience is relatively high. On the other side there are the graphic cards, which have a relative low quality. The external environment caused a conclusion about the opportunities, which the company could focus also on the Business-to-Business market. A threat could be, that Nintendo Wii is a not environmental friendly product and therefore the target audience could be distracted. With these information considering the environment of the company it is possible to make further research and create a new strategy plan in order to improve for a successful status in the gaming industry.


Marketing Audit Laura Jane Willen, Esra Toker


(Modfreak, n.d)


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Marketing Audit Laura Jane Willen, Esra Toker

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Marketing Audit Laura Jane Willen, Esra Toker

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