Sony market segmentation targeting and positioning

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Marketing strategies for Sony Ericsson UK

Executive summary

Sony Ericsson mobile communications is the third largest mobile phone manufacturer in the world. It has widespread stores in various countries in Europe with its biggest concentration being the UK market. Between the years 2004-2007, the Sony Ericsson brand recorded increased sales due to the innovative products introduced in the market. However, over the last two years the company has recorded decreased sales volume and a reduction in the market share in the UK market. (Ajasafe, & Gillett, 2011). This has been attributed to increased competition from Samsung, Nokia and Apple brands. The paper aims at looking at the current marketing analysis of the company with a view of suggesting possible marketing strategies. In this regard, the paper evaluates the current business environment using SWOT and PESTLE analytical tools. The report draws conclusion from the issues addressed and highlights recommendations and marketing strategies for the company.

41 Introduction

52. Situation analysis

62.1.1 Political aspect

62.1.2 Economic aspect

62.1.3 Social- cultural analysis

72.1.4 Technological aspect

72.1.5 Legal aspect

72.1.6 Environmental aspect

82.2 SWOT analysis

82.2.1 Strengths

82.2.2 Weaknesses

92.2.3 Opportunities

92.2.4 Threats

103 Differential advantage

114. Segmentation, targeting and positioning strategy

114.1 Segmentation

114.2 Targeting

114.3 Positioning

125 Marketing objectives and goals

136. Marketing strategies and programs

136.1 Product

136.2 Price

146.4 Place

146.5 Promotion

156.5 People

156.6 Process

156.7 Physical location

16Conclusion

17References

1 Introduction

The demand for mobile phones handsets has increased gradually in the UK market. More than three Quarters of the adults own a mobile phone (Ajasafe & Gillett, 2011). The market is however becoming competitive as mobile phone brands bring in new products. In comparison to other European countries, the consumers are getting a fair deal in terms of pricing level although there are off-net prices which are fairly high. There are changing patterns on mobile phone usage as more people prefer to use a mobile phone to text rather than to call. This has seen increased advertising of new phones with more texting and chatting options.

Sony Eriksson Mobile communications AB has recorded reduced sales as a result of the increasing competition in the market. In 2011, the company lost considerable market share because of its inability to successfully launch a Smartphone to compete favorably with Samsung and Apple brands (Gelder,2012). They launched Sony Xperia Arc and later a more improved version of Sony Ericsson Xperia Arch S which had a secondary camera installed. This was however; a little late as consumers had switched to other brands which had entered the market first .Faced with these challenges, this report presents the marketing strategies which are highlighted in the first part of the essay. The report uses PESTLE and SWOT to evaluate the prevailing business environment. The second part outlines the competitive advantages that the company enjoys as well as short term and long term strategies that could enable the brand perform better.

2. Situation analysis

The existing business environment of Sony Ericsson UK can be analysed using PESTLE and SWOT analysis. SWOT analysis evaluates the internal business environment that the company uses realizing its objectives. PESTLE analysis is an analytical tool used to evaluate the internal business environment.

2.1 PESTLE analysis

2.1.1 Political aspect

The political situation in a certain country helps to determine the profitability and pricing strategy of a company. Sony Ericsson brand has been able to set up successfully because of the stable prevailing political situation in UK and many of European countries. The concern over ethical marketing has led to increased boarder regulations and consumer goods. The brand has however not been affected because of emphasis on quality. The stability has enabled the functioning of supply chain arrangements which Sony Ericsson has been able to utilize successfully (Dunn, 2006) The UK government knows that any unforeseen political situation could immediately affect trade not only in the UK but also in the region. Consumer laws targeting mobile phone tariffs have however, affected sales volume of Sony Ericsson as people have became more conscious to prices.

2.1.2 Economic aspect

The economic downturn which affected Europe in the year 2009/10 has had a negative impact on the company sales. Disposable income of most people reduced and hence decreased consumption on non-essentials such as mobile phones (Sony Ericsson, Annual Report 2010). The situation has however improved and the purchasing power has increased. The company has however increased its strategic promotions methods which have ended up increasing the cost of doing business. The potentiality of the market is also decreasing but it is still favorable to do business. The current rates of interest and inflation levels are fairly stable at the moment (Steinbock, 2007). Any investments taken by the company looks promising because of the future prospects of economic stability.

2.1.3 Social- cultural analysis

Increased population growth has led to increased demand for mobile phones in the country so as to meet the demand. The dependency on mobile phones in many aspects of life has also led to increased demand. In business, people prefer to use branded mobile phones which can help them do business on the go. These include word processor, email service and fast internet connectivity (Curwen & Whalley, 2010). UK is a developed nation and hence people appreciate technological innovation and its penetration is deep in the economy and this has had a positive impact on Sony Ericsson since it relies on constant technology innovation.

2.1.4 Technological aspect

The level of technology in the economy has gradually increased in the economy. The new technologies on mobile phones are increasing and this is fuelling a lot of competition in the market. This has seen introduction by other brands in the last 2 years. Sony Ericsson recognizes the fact that it has to come up with more technological competitive brand to be able to march the new innovations.

2.1.5 Legal aspect

There are no stringent mobile phone regulations in UK. However, there is increased awareness on the usage of mobile phones by children. Use of mobile phones wile driving has been banned. This however, has not had any significant decease in mobile phone sales in the country. Sony Ericsson brand recognizes the fact that, the company has a safe regulating environment to operate.

2.1.6 Environmental aspect

There have been increased campaigns targeting Electronics Company on the issue of environmental pollution. Environmental activists argue that the mobile phone companies are among the largest contributors of the carbon gas which leads to global warming. There are also the recent concerns that continued use of mobile phone can result to increased radiation levels and hence can result to cancer (Daniels et al, 2007).The increased pressure has caused Sony Ericsson brand to incur extra production costs in terms of pollution rights and increased taxation.

2.2 SWOT analysis

SWOT stands for Strengths, Weaknesses, Opportunities and Threats encountered by a firm.

2.2.1 Strengths

The introduction of the innovative Sony Ericsson Xperia with resistive touch screen has boosted the Smartphone sales for the brand. This has been in line with the demand by UK market which has increased sales in Smart phones (Curwen & Whalley, 2010). The pricing policy of the company is also acceptable to many of the buyers. The brand name of Sony Ericsson in the UK market is also strong. In the previous years, the company has shown capability of producing quality phones and this has boosted its fortunes as a reliable brand in the market (Brown, 2008). Their phone types are also easily compatible with other brands. This has enabled the brand to have a competitive edge over the others in the market.

2.2.2 Weaknesses

The Sony Ericsson brand is not targeted towards business people hence being seen as incompatible with the corporate world. Furthermore, the cost conscious consumers may still not be able to buy the new Sony Ericsson Xperia introduced in the market because it is still relatively high to low class consumers. The late launch of Xperia Smartphone in the market has seen considerable reduction in sales for the company (Gelder,2012).

2.2.3 Opportunities

More technology advancements means that more consumers will be attracted to its new brand which is favorably cheap than the rest in the market. The new Xperia phone is also upgradable hence giving customers limitless opportunities. Various partnerships with other marketing companies will see the marketing costs decrease significantly for the company. Smart phones are expected to be the main attraction in the UK market in the short run. The company therefore, has an opportunity to introduce more innovative products to be able to meet the increasing demand.

2.2.4 Threats

Increased competition for Smartphone sale in the UK market has been the greatest threat to Sony. This is attributed to the fact that Smart phones are easier to make than before. With the fast changing environment, companies are coming up with new brand on a regular basis. This has forced Sony to introduce Xperia which could not even match the innovations by Samsung and Apple Inc (Franchini, 2008). More companies may enter the market in the long run which will lead to even grater competition.

Introduction of cheap phones in the market is also a great thereat to the brand sales. These new brands pose a great threat especially to cost conscious consumers. In the long run, the company may be forced to reduce the price level of Sony Ericsson Xperia to be able to compete favorably with new entrants into the market. It is also difficult to switch brands for the older generation who prefer to continue using the brand he/she has been accustomed with.

Lumia Nokia series has largely been embraced in the market because of the integration of Windows mobile OS in 2012 (Dunn, 2006).

Sony Ericsson brand will therefore need to introduce other innovative product to be able to match the ever changing customer needs.

3 Differential advantage

Sony Ericsson released its first product in the market in the year 2002. With 10 years experience in the telecommunications industry, the firm has been able to cut down its production costs over time to give a differential advantage of others in the market (Evans & Berman, 2007). To start with, the joint venture partnership between Sony and Ericsson gave the firm the right pushes towards establishing itself as a global company. The partnership was a huge boost as it gave the company major access to the European market. The partnership also helped the firm to establish strong distributional channels. Sony’s technology has hugely helped the firm in market design, core competencies as well as adequate management skills. Sony brought it the marketing skills while Ericsson brought the needed technology. This is the reason why immediately after establishment, the company was able to give others worthwhile competition in the UK market.

The company can therefore regain considerable market advantage by pricing it cost effectively and resolving its stability problems. The company has managed to improve its efficiency levels. This is possible through its ability to minimize production costs while maximizing outputs and profits. The company can also be credited for its innovation. It was the first company to come up with GSM/GPRS enabled color screen handset. It later introduced the Bluetooth technology and high mega pixel mobile camera. These innovations helped the company establish itself as a strong brand capable of controlling the market.

4. Segmentation, targeting and positioning strategy

4.1 Segmentation

The firm uses mainly lifestyle and demographic variables in segmenting their market (Harris, 2007). The firm should however lay more emphasis on the changing lifestyles of the young generation and cater for their ever changing needs. In order to regain market share, the company can segment the market into rural and urban people. The rural targets will help increase the market share. The urban should comprise mainly the people aged 15-30. This ought to be their main segment in order to compete favorably with brands in the same market segment. This target group of people focuses mainly on music, leisure, sports and has the flair for hip gadgets in the market.

4.2 Targeting

The firm targets the upper middle class professionals. These usually have busy schedules and hence need to communicate with their colleagues and families. The secondary targets are the high school, college and graduate students who need devoices which are multifunctional and portable. The secondary targets also include medium sized corporations and they aim to help managers and employees have crucial data access on the go. Thus the company has two main segments and this is called multi segments targeting. The company should however, enhance its target group to incorporate more teen activities that are the main targets of main competitors. With the over emphasize on online chatting, social networking and sharing, the company could be loosing out on this target group.

4.3 Positioning

The positioning strategy that the company uses to market its new products is the positioning of the new product as a convenient, value-added device which can be used for personal and professional use by young professionals (Steinbock, 2007). There is also the focus on convenience as it incorporates other features such as music, photo sharing and internet access. This positioning strategy enhances Sony Ericsson products as professional and hip.

The firm however needs to enhance its positioning towards a more relaxed and younger generation who want more apps on the go. The younger generation would therefore make a better positioning strategy. In this case, the company can establish a link between them and the users through more enhanced features which include video conferencing and social networking.

High value

Sony Ericsson

Nokia

Samsung, apple

old Young

Siemens Sagem

Low value

5 Marketing objectives and goals

The company should aim at becoming the leading communication and entertainment brand which is preferred by many people. The firm should therefore aim at increasing the market share by more than 18% by the 2014 through introduction of new innovative products (Sony Ericsson, Annual Report 2010). The company should set its short term goal of ensuring that it competes favorably with Samsung and Apple. It plans to be the third leading mobile phone provider by the end of 2013. They have launched their flagship mobile phone for the year, Song Ericsson Xperia Z (Krishna, 2012). The ornainisation should aim at achieving a 10% share based on sales within the end of the year 2013. In addition, the firm is aiming is aiming for a 2% share of the UK PDA/Phone market through unit sales of 500,000 within the next two months (Krishna, 2012).

6. Marketing strategies and programs

6.1 Product

The firm should strive to ensure that it maintains product quality and differentiation while trying to venture into other world markets not ventured before. When their band was introduced into the UK market, it was uniquely famous for its uniqueness and quality. It has however received a lot of criticism due to lack of stability in the telecommunications market (Harris, 2007). Customers were feeling that they did not get the value that they paid for. The new product strategy which has been adopted by the firm is to produce phones for a certain market only. The problem with this strategy is that this kind of market is changeable and hence consumers can easily shift to other brands when they realize a better deal. The firm should therefore develop new technologies to help them come up a robust long term product strategy. With the ever changing technological advancement, providing high-end phones is not a sustainable way of ensuring stability in the long term.

6.2 Price

The firm should ensure it follows up on its pricing policy. The distributors should be monitored so as to ensure that there is strict monitoring. Top level management should also follow up to ensure that the brand is not diluted by selling at price which is different from the company pricing policy. After the economic recession in 2009, many consumers are not willing to risk and buy many high end products which do not guarantee value. The market penetration pricing strategy can also help increase the economies of scale for the firm. Some of the bulk can also be passed to the consumers. The current target which is young professional has higher disposable income hence their ability to use more money on buying accessories such as mobile phones. The target group is however not sustainable in the long term and the firm will have to target the more youthful group. The firm can therefore diversify its target market in order to reduce prices. One such policy would be to target low income buyers especially the aged and those living in rural areas. This may not generate enough sales but would be a solution in the long term.