Launch of New Portable Audio Player by Nakamichi Corporation
Many reports suggest that portable audio players were mostly replaced by smart phones especially by iPhone. These smart phones can play both audio and video files, however the fact is that these smart phones won’t be able to replace the portable audio players completely due to the expensive nature of smart phones and the low battery capacity to support sustained audio playing. There are many studies which also indicate that consumers in today’s market prefer to buy portable audio players rather than these smart phones (Gilbert, 2001, pp330-341). In a survey carried out on 2,408 respondents, 52% own an audio-only MP3 player. Most of such portable audio players have now a better user friendly interface.
The sale of portable audio players crossed 182 million in 2006, which was up by 42% from 2005. The audio players market is fueled by various market driving forces like the inexpensive nature of these relative to other audio systems and portability. The audio player market is forecasted to grow up to 300 million units by 2013. Despite the fact that the market of portable audio players has been facing big threat from smart phones since 2010, there has been an increase in the sale due to the above mentioned driving forces.
There are mainly two competitors of the Nakamichi Corporation which are Sony Corporation and Apple Corporation. These Corporations hold the largest market share of portable audio player market.
Sony Corporation has kept its position in portable audio players with a 24% share in 2010. It has gained 3% over its 21% share in 2009. The reason behind this increase in market share is that Sony launched updated models of Sony Walkman, in which it offered its consumers with a highly improved audio quality at very competitive prices.
Another market competitor of our product is iPod from Apple Corporation which launched the iPod digital music player in Oct, 2001. It got very good response from the market. Currently Apple has evolved its iPod to include various models in which it has targeted the demands of its varying users. The iPod is currently market leader in portable music players by a very large margin of more than 220 million sales as of September 2009 which has further grown in subsequent years. Apple is currently selling four models of its iPod which are iPod Shuffle; available in 2 GB, iPod Nano; available in 8 and 16 GB, iPod Classic; available in 160 GB, iPod Touch; available in 8, 32, and 64 GB.
Our new product will have 32 GB memory which is currently not only an economical figure to embed in but also can store a reasonable number of music files for an average user. It will not have a touch screen to reduce the cost further which will reduce the price accordingly. The reason to drop the touch screen feature is that most of the audio listening consumers are the ones who listen to music while doing some other work and usually the touch screen feature is left aside in most of such devices as offered by our competitors. This idea will reduce the cost and price of our product substantially which will be helpful in acquiring desired level of market share (Karl, Niketh, 2010, pp170-176). As calculated to justify the launch of the product, the target market for the portable audio player is in more than one billion dollars globally hence an achievement of most conservative market share of 5% during the first year of launch, can still get us annual sales revenues of $57.5 million dollars.
Segmentation and Positioning
The market for portable audio player is segmented by the demographics of the customers as the company is planning to get the technology through music equipment manufacturers; its customers are mainly composed of young audiophiles (audio enthusiasts). The main reason to choose audiophiles as the market segment is that the technology designed in this product is on the cutting edge of the music, we have estimated that a large ratio of initial sales will be acquired through this market segment. Audiophiles are the very first market segment which is targeted for our product.
Audiophiles are the ones who feel pride about themselves on having all the latest and up to date technological instruments, no matter what are the uses of these devices. They always try to stay current with the technological sector. A portable audio player gets a distinct niche position among the audiophiles (Michel, Wagner, 2000, pp 221-235). However, not even a single of these products can exploit the rising amount of audio and now video files available on the web. Here is where our product comes into play when the audiophiles get bored from the technologically advanced equipment then they listen to music on a simple portable audio player and furthermore the audiophiles usually prefer to listen to music on the portable audio players with better reliability than sophisticated technology and usually keep the sophisticated smart phone in safe drawers.
A portable audio player not only will facilitate the reproduction of audio, but it will also clear the way for them to transfer the music files to their peers. For example, the images taken from digital cameras can be copied to a portable audio player and sent to the peers. Clearing the way for digital media transferring through a portable audio player component attached with home audio systems proves to be an excellent use for audiophiles.
The positioning strategy of the two market leaders in portable audio players has been excellent in the past and both of them have achieved substantial market share through inducing good brand value in their customers (Ries, Jack, 2000, p 193)
The positioning of the Walkman by Sony Corporation introduced the theme of “Japanese-ness” into the global market, which has been considered as synonymous of sophistication and high level of technology. There were two variants created by Sony for its portable audio player which were "Walk-men" for men and "Walk-women" for women. These products represent an ideal positioning of the brand created through excellent advertisements. The main focus of Sony Crop in advertising for its Walkman product has been to present it as a culturally “hip” product in the market.
The primary concept in advertising the Walkman series by Sony Crop has been to emphasize on the personalization features of the product. This product has the capability to arrange a playlist for its user which has been considered the breakthrough in the market of portable audio players as there has been no other such audio player with this feature before Sony Walkman. The consumers of this product get to decide according to their mood to play specific type of songs through creating separate lists for each mood or occasion (Raphael, 2011, pp 13-17).
Currently Sony Crop has successfully positioned its Walkman product in the market of portable audio player through brand recognition and customized products. Our new product will have to include the feature of customization of playlist through including a small LCD display unlike traditional non-display portable audio players. This will add some cost in the production of the product, however in return the product will be preferred for use by most of the buyers of portable audio players due to its robust nature.
It is pertinent to mention here that we need to keep the image of our product in such a way that it should serve the consumer in a manner as if it is made separately for each individual which can be achieved through mass marketing and personalized differentiation (Sally, Lyndon, 1996, pp 145-166). The problem we will be facing is the best positioning technique used by Sony Corp in which it has accomplished the intellectual achievement of mass individualized through targeted advertisement hence making it enable to be renowned as a significant product of the latest technology.
If we further analyze Sony Corp in positioning its Walkman we will come to a conclusion that after decades of success even today Walkman still manages to keep a good market share through the brilliant ideas implemented by their marketing experts. Walkman is still holding a good market share and value through although a large number of producers of portable audio players have come in the market and are trying hard to get more and more of the market share from Sony Corp. Currently we face also face great challenge to take market share from Sony Corp due to the reason that Walkman still remains an effective product of Sony Corp mainly due to its effective advertising ideas of positioning. Sony Corp has successfully positioned its product in the youth through making its product as a symbol of freedom through bringing its portability together with the customization.
Apple Corporation has been the other competitor in portable audio player with its variety of products from iPod Shuffle to iPod Touch. Apple focuses mainly to attract its target audience by projecting cool, stylish and fashionable product features. All mediums of advertisement are used to spread awareness about the specifications of the product. Electronic and print media is been used extensively to spread the buss among the masses and an exciting hype is created based on the matchless features of the product so as to get maximum attention and huge margin of profit. Apple implies its products as a status symbol and people used it a way to create impression among relatives, friends, peers and social circle (Art Weinstein, 2004, pp-178-181).
External factors
There are various external factors that play crucial role in determining the success and failure of the product.
1) Advertisement is one such exterior crucial factor that impacts on the brand image and thoroughly design advertisement strategy is needed to expose maximum number of people to the existing and upcoming product range. Influential and convincing ad change the mind of the consumer and a research has proven that around 97% customers get attracted to knowledgeable advertisement. An ad should communicate the unique attributes of the product and its competitive advantages compared to the other brands in the same category. Bad advertisement is equally harmful for the product and other products of the company because people tend to develop abhorrence against the company and the brand (Marinel, 1992, pp 231-240).
2) The company reputation and the performance of already existing products contribute to the success of new product. If a well established company brings a new product and advertises effectively among masses then chances are high that people will believe the performance and quality claims readily compared to a product launched by a company will low repute and market standing.
3) The competitors are also an important factor because they come up with their own strategies to combat with the new customized features of product .So it is very important to handle competitors tactfully and forces to invent new and competitive products. Competitors push hard to offer more innovation and better technology backed product to the consumers.
Internal factors
1) Internally an organization needs to capitalize proficiently its workforce by implementing the concept of SHRM. Organization should ensure the employees commitment, complete satisfaction and progressive career in order to get their trust and devotion. The biggest strength of any organization is to have hard working and dedicated workforce in order to make a remarkable difference and to achieve unbeatable success lead.
2) An organization should have well organized project management and budgeting and strong alliances with the suppliers. Effective communication system in an organization is a key to manage resources in a valuable fashion.
3) Ongoing research and development should be given special attention to invent more advanced and latest products in order to capture market share quickly. It helps an organization to patent its unique ideas and range of products with matchless attributes.
Conclusion and recommendation
After analyzing the market situation and defining the market segment for our new product, we can confidently state this fact that there is still too much scope for our product to capture worth market share not only to justify its launch but also make a good deal of profits out of it over next years. The market segmentation has been carefully determined and the positioning of the product can be aimed at targeting the defined market segment only (Paul et al, 1999,pp198-210). There are chances of consumers buying our product other than the targeted market segment as well but they are quite less so we can be certain to launch our product by keeping its position in line with the defined segment only. In this report we have evaluated the internal and external factors in details and finally have come to the conclusion that our organization i-e Nakamichi Corporation can successfully launch the new portable audio player and make substantial amount of profits over its sales.
Company should try to capture new and untapped market of audience by making its product more durable and affordable .Youngsters are the main consumers of our new product so features should reflect a true picture of their needs ,demands and style standards. So there is a lot of potential in this market and company can successfully launch a portable audio player brand by the end of this year .New and vivid colors of the product may attract females, kids and youngsters in a more persuasive way. Company should bring out with strong advertisement and supply chain so as to make product visible and available to get a big hit success (Raman, 1998, pp 67-71). Company should also launch its product worldwide as done by the competitors as it will enhance brand visibility and more potential customers will tend to buy and test our new product. Strong after sale support should be ensured to facilitate customers in troubleshooting. Finally, we can conclude this point that our production and design department should work in an incorporated way to bring out a new audio player. Supply chain and distribution channels should be properly monitored so as to make the product successful in the market.
References
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