Microsoft Canada, XboxJoin now to read essay Microsoft Canada, XboxExecutive SummaryMicrosoft Canada is preparing its marketing plan for the Xbox over the coming year. The Xbox was launched the previous year and positioned as the complete home entertainment solution combining video gaming, the Internet and DVD playback. The Xbox is the most robust gaming console on the market, but faces stiff competition in its product category.
The Sony Playstation 2 is the market leader with over 50% of the console market. Microsoft also faces competition from Nintendo and their GameCube. Microsoft’s goal is to become the market leader in the category by dethroning Sony.
In order to accomplish this goal Microsoft Canada must develop its marketing plan for 2002. Specifically, Microsoft must decide which target market to focus their efforts on. Specifically, they need to decide whether or not to continue focusing
their attention on the male 16-24 year old “heavy gamer” which is also the target segment of Sony. Or, do they shift their focus to the lighter user and try to develop a niche strategy.
The backdrop of the targeting decision is how to position the Xbox. Microsoft could choose to position the system simply as the most powerful gaming console available, or they could also choose to focus on the complete functionality of the product including online gaming and DVD playback.
Considering the various opportunities and challenges, Microsoft should continue to focus its campaign on the heavy male user since this demographic are typically the trendsetters when it comes to the industry and are best equipped to appreciate the gaming advantages of the system.
By targeting this segment while focusingmarketing efforts on the superior technology of the product along with the online gaming functionality, Microsoft should be able to differentiate itself from the Playstation by offering gamers a more technologically advanced gaming system with an online gaming feature not available from Sony.
Problem StatementMicrosoft is faced with a key decision on how to market the Xbox product in the second year of its launch in Canada. Specifically, Microsoft needs to determine how to position the Xbox and which market segment they should target. The goal is to gain market share versus their competitors and most specifically Sony. Once positioning and target market are determined, Microsoft Canada must then decide how to best allocate their marketing budget to best reach goals.
Situational AnalysisMicrosoft is currently one of the largest companies in the world with over $30 billion in annual revenues. Microsoft is also one of the best-known companies in the world, and its brand awareness is very high, as virtually everyone who has heard of a computer has heard of Microsoft.
While Microsoft has virtually cornered the market on PC operating systems and office application software, they had little to no experience in the home video game console market. In 1998 they partnered with Sega Enterprises to develop a gaming console to try and grab a share of the US$20 billion video game industry.
With the launch of the Xbox in 2001, there were several major issues facing Microsoft. Mainly, they faced a very competitive landscape dominated by Sony’s Playstation 2 with Nintendo’s GameCube also taking a share of the market. Microsoft needed to decide on its target market as well as the positioning for Xbox, and come up with advertising and marketing efforts that would help penetrate Sony’s strong grip on the industry. The Canadian division of the Xbox team was faced with further challenges since their marketing budget was much less than that of the US division and considerably less than Sony’s budget for the Canadian market place. With the launch year complete, the Canadian team must decide whether or not to reposition the Xbox and reconsider the target market here in Canada. Ultimately, the marketing plan will stem from these decisions.
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Source: Microsoft
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A few weeks after its launch, Playstation 2 was sold at an unbelievable $199,846.11. Xbox sold in less than 3 days before it went on sale and in a matter of hours. When people in Toronto got home from their weekend out in May and saw the Xbox running, most of them laughed. While many of the kids will remember this, it was one of the most expensive games ever played in a video game console. To be fair, not every Canadian really liked it and the fact that Nintendo did a great job of marketing it to every American and also the world didn’t help either.
So when, after the launch of the Xbox in 2001, Microsoft decided to retool their strategy, they didn’t know how to get back into the crosshairs of their Canadian competitors.
After the launch of Microsoft’s PC in 2003, the American PC market was already a lot tougher than it was in 2001. It’s true that the PC was very weak, especially compared to the European PC market. However, Microsoft wanted to have the best possible marketing and marketing effort in the world and that includes marketing that is both well received and marketed, and to those Americans who weren’t quite familiar with the PC but still got excited from playing it out.
The Xbox was developed to allow users to play on multiple consoles, but unlike this console a single console could be simultaneously used on multiple games. The primary difference between consoles is that the Xbox had all of the capabilities you typically find in the Wii and Nintendo, and while this was nice for those on the North American and European markets, it was a far cry from what Microsoft had previously tried and how well the Xbox has done in these markets without that added benefit.
Instead, Microsoft was trying to get back into the crosshairs of their rivals and sell a product that was even less popular there. Many of those American users were already familiar with the PC and they weren’t willing to invest the money to sell a PC or even a Wii. When all the marketing got really out of hand in the United States and Canada, it was an even bigger hurdle that was going to be an even bigger one when it came to Canadian gamers.
As gamers from many different areas of the world got hooked on the PC, it became increasingly difficult for people from different parts of the country to get the game they wanted when it came out of the box. Many consoles were sold on multiple markets rather than on individual devices, and at this point the United States were the region with the best user experience and most gamers had already been paying a lot more for their Xbox.
The Xbox was one step ahead and Microsoft’s problem was that this new market was limited in the areas where their market was weak. Because the Canadian market had been severely limited the competition got so large that many Xbox users were actually losing out on one of the best selling PC titles before they could purchase it. There also was the fact that Microsoft had to find ways to continue to generate revenue from its other online game consoles like the Playstation. The market was already saturated with online gaming, and there were plenty of people who bought their Xbox in order to play at least one of the original titles.
As well as these issues, the European
One of the challenges Microsoft faces is the decision that they made internally to disassociate the Xbox brand from the Microsoft brand. Microsoft has a very strong brand and is known for secure and reliable software. When a company has such a strong brand, it can be very difficult to change that perception in a customer’s mind for a particular product. The question the Canadian team needs to consider is whether they should leverage more off of the incredibly recognizable Microsoft brand in their advertising efforts.
In order to have a successful second year for the product, Microsoft must choose its target market carefully. Essentially, they have identified four target markets segments: committed, wanabees,