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American market less responsive in

purchasing AIBO when compared to


Japanese market
Problems:
The product remains unprofitable for Sony at
current production levels
Possible Causes:
High price tag
American consumer sees robots as dangerous
or threatening and see little value in a robotic
pet that performs no functional tasks
The Problem
Situational Analysis
Methodology and Criteria
The Alternatives
Alternative Selection
Implementation
Strengths:
Association of Sony brand name
Sony is market leader AIBO is the first
commercially available robot
Weaknesses:
Not part of Sonys core competencies
electronic, games, and entertainment
Price tag of US$1500-$2500
Sony often fails to meet demand
Opportunities:
Social: Baby boomers in the US market
Technological: The research holds the
potential of being extremely valuable to
external high tech companies
Political: Government agencies have a keen
interest in how new technology can improve
its operations
Turn the robotic pet into a learning tool at
schools or an automated caretaker at aging
homes
Threats:
Competitors: Honda's Asimo uses a platform
recognition and network integration
technologies similar to the AIBO
Technological: A high-tech company such as
Sony and its competitors are always threatened
by a high rate of technological obsolescence
Economic: By the nature of the product
categories in which they compete, Sony and its
industry offers many high-end, luxury products

Four criteria were used to compare the
alternatives
1) Short term to medium-term profitability
(30%)
2) Alliance with Sonys core competencies
(30%)
3) Long term growth potential (20%)
4) Ease of implementation (20%)

Stop Production
Reasons:
Sony AIBO is unprofitable
Does not fit with core product strategy
American market has a history of
associating robots with enemies

Market Penetration
The Innovator market has not be
saturated
Same product, same price
Same Distribution channels
The promotional strategy would eschew
mass advertising and focus on building
word of mouth buzz
Technology trade fairs
Market Development
Attract the early adaptors and lead
towards a mass market
Functional AND emotional positioning
Build primary demand
Market is large and will offer long-term
growth
Short-term profitability because low
R&D

Product Development
Exploit the tech-savvy, innovator market
that it currently targeted
Develop the AIBO to the point of being
less of a continuous innovation and more
like a discontinuous one
Purchase because of the novelty
Diversification
Two diversification strategies
a) diversification towards a highly functional
AIBO which performs duties and is targeted
towards adults
Development of a highly functional product that
answers the question, But what does it do?
American consumer is pragmatic
Low short-term profits
Most aligned with Sonys core competencies of
producing high-tech electronics
b) a primitive-version AIBO that is geared
towards children
Dropping both the price and the functionality
Mass advertising campaign,
Integrated components
Element of luck when attempting to create mass
infatuation

Short Term to
Medium Term
Profitability
Alliance with
Sonys core
Competency
Long Term
Growth
Potential
Ease of
Implementation
Total
Weighting Weighting Weighting Weighting
30% 30% 20% 20% 100%
Stop Production 1 0.3 7 2.1 1 0.2 4 0.8 3.4
Penetration 2 0.6 3 0.9 2.5 0.5 7 1.4 3.4
Market
Development
4.5 1.35 3 0.9 6 1.2 3.5 0.7 4.15
Product
Development
2 0.6 6 1.8 4 0.8 3 0.6 3.8
Diversification
Kids
2 0.6 4 1.2 6.5 1.3 1.5 0.3 3.4
Diversification
Adults
1.5 0.45 6 1.8 7 1.4 2 0.4 4.05
Spend around $3M on national advertising
campaign
The advertising budget will be split into a 40-60,
respectively.
Fifteen percent of the 40% will be spent towards TV
commercial
10% will be spent on movie ads in high-tech movies
15% will be put towards advertisements in different
newspapers, magazines, and other publications
The remaining 60% of the budget will be spent on
direct selling through booths in high-traffic, public
areas, such as shopping centers and in-store
displays/personnel at Sony and The Sharper Image
Stores across the country

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