Marketing the Playstation 2

1.0 – Introduction

The Sony Playstation 2 (PS2) is produced and marketed by Sony Computer Entertainment, a joint venture between Sony Corporation and Sony Music Entertainment. To date fifty million units have been sold worldwide and in 2002 it was dubbed “console champion” by market researchers’ In-Stat/MDR . The lucrative video games market also accounts for 21% of consumer purchases and video games are the second most popular consumer purchase of 2003 .

This report will focus on Sony’s marketing communications activities in the UK regarding its PS2 console. This Sony product has been chosen as it entered the market in 2000. Therefore, the PS2’s marketing communications objectives and strategies can be analysed over a suitable time period of three years. This will be achieved through the use of various marketing communications theories and frameworks and as a result of this, suitable recommendations will be made for future marketing activities.

2.0 – The Strategic Level

Sony’s marketing objectives are to lead the games console market and set the standard for videogame technology. This was seen in 1995 with the introduction of the Playstation 1. This console set the standard for gaming, with its advanced graphics technology.

This was seen again in 2000 with the launch of PS2, becoming an instant success and market leader within two years. The PS2 has not made a large profit directly for Sony, although it accounts for 40% of the firm’s total sales. The current and long term objective therefore is to win the console market and make super normal profits on software

When looking at the Ansoff matrix (appendix 1), it can be seen that the PS2 in 2000 was subject to product development. This is because the PS2 was a new product and technologically superior to its competitors, whilst entering an existing market.

It could also be said that the PS2 was subject to diversification as it is also able to be used as a DVD player and CD player. Therefore PS2 was being diversified to form a multimedia product rather than a dedicated games machine. By doing this Sony have extended the products market to those individuals not only wanting a dedicated games machine.

This is an important point as in 2000 DVD technology was relatively expensive, the PS2 offered this as well as state of the art gaming technology, all for the price of a console. The products reach therefore was also extended to those consumers wishing to purchase a DVD player.

It was necessary for Sony to launch the PS2 in 2000 as the following year would see the Nintendo Gamecube and the Microsoft X-Box being launched. Both of these consoles are more powerful than the PS2, although the Gamecube has no multimedia options.

So, by releasing PS2 in 2000, before more advanced competition could enter the market, Sony have effectively closed any strategic gap that would have existed had they released it at the same time as the competition. Thus making them market leaders before the opposition could get started.

Despite the better technology of the competition, at present PS2 dominates the market once again. Sony has recently diversified the PS2 by up rating its DVD capability and giving it more up to date aesthetics. Whilst this may extend the PS2’s life cycle the key to its market dominance is the quality of its software, its extension of reach, its creative strategy and its brand strength.

2.1 – The Target Market

As PS2 would not interest the entire UK market, rather than approach it through aggregation, it is necessary for Sony to segment their market. This allows Sony to undertake more direct and personal communications with their target audience.

The market segmentation variables for PS2 can be seen to take elements from a number of bases of segmentation. This data has been assumed from the UK gamer profile shown in (appendix 2) and is as follows:

a) Demographics – Age
Gender

b) Socio-economic grouping

c) Psychographics

From the data shown in appendix 2 it can be seen that demographic aspects such as age and gender can not be sufficiently targeted. Whilst the age distribution of gamers leans towards ages 16-26, a reasonable number are also under sixteen and over twenty seven, this could lead up to any age.

As regards gender, a vast majority are male, although with each next generation console launch it has been recorded that the number of female gamers is growing . This indicates that for future marketing communications success it would not be wise to simply target the male audience.

Socio-economic data shows that students form the majority, with a fairly even distribution between other socio-economic groups. As class boundaries are currently becoming more blurred though, this data may not be wholly reliable.

Sony therefore appears to have segmented on the basis of psychographic factors, as these differentiate consumers in terms of their psychology, such as values, lifestyle and interests. This means the focus of targeting is on why gamers buy, despite the spread of demographic and socio-economic data in evidence. To back up this point it has been suggested to “segment on the basis of values and beliefs, because these are what drive behaviour and position the brand accordingly” .

It is difficult for Sony to target a specific audience. As Geoff Glendenning, former Playstation marketing director states “All kinds of people are now playing console games. The age range is anything from six to sixty” . The market for consoles is growing up, as players who became captivated as children are now buying more advanced hardware and more sophisticated software.

This accounts for the age sixteen to twenty six bracket holding greatest potential, as the older ones would have grown up with the introduction of the gaming phenomenon. Sony’s surreal creative strategy (discussed later) would most probably be decoded most effectively by this age bracket, as well as younger teenagers, as they are more susceptible to the gaming experience. It can be argued therefore that Sony’s preferred target audience is aged from early teenage years to the mid to late twenties.

As well as this targeting of the end consumer Sony also target retailers, to whom PS2 needs to be seen as the console of choice. As many PS2 consumers are children it is also important to target DMU’s such as parents. PS2’s price (currently around Ј140) is usually beyond the scope of pocket money and so children would be acting as influencers to their gatekeeping parents. The media is also important as there are many PS2 publications, favourable coverage here would have a great influence on the purchase decision.

2.2 – The Playstation Brand, Creative Strategy and Positioning.

The Sony brand is a powerful force and as with many Japanese products, has set the quality standard by which other products are often judged . This ‘quality’ corporate image therefore envelops the Playstation brand under the Sony family umbrella.

The PS2 logo is very simple and identifiable, it simply says PS2 but in a very square and elongated manner. This makes it simple, identifiable and fits in with the kind of surreal creative strategy that is trying to be created.

The PS2 brand is successful as it is the market leader and has sustained this in the face of strong competition. Branding expert Peter Doyle also states that a successful brand must command a high profit margin . Although PS2’s profit margin is not high, its software revenue is huge and the brand therefore successful.

PS2’s creative strategy focuses upon the theme of ‘The Third Place’. This:

“Challenges the prevailing notion of the third place as a category of
sites, distinct from the first place (home) and the second place (work)”.

This was depicted in PS2’s launch campaign as “a sinister, dreamlike space characterized by abrupt and disturbing transformations to the environment and its occupants”9. The aim being to highlight the intensity of the gamming experience, rather than the power of the console.

This way the PS2 gives itself an edgy and dark brand positioning, making itself an experience to be discovered rather than just a game. This creative strategy has been criticised by X-Box’s marketing director who says “The dark, club culture feel to the brand makes it look exclusive, narrow and geeky” . As the widening demographics for segmentation show though, a cult feel is far from desired as this would restrict sales.

This creative strategy is trying to change people’s view of gaming by “elevating it up the entertainment food chain, positioning it alongside film and music”10. The creative issue has been summed up well by Michelle White, a creative consultant:

“Sony has recognised and used the advantages of having a great brand
to start with and has enhanced brand reputation and created sustainable
Consumer ‘want’ by applying a marketing strategy that appeals through
Emotion and satisfies through performance”11.

3.0 – The Tactical Level

When analysing Sony’s implementation of marketing communications, it is useful to consider them in terms of the 4 P’s and the marketing communications mix. This ensures that PS2 will satisfy its target market. This means that PS2 as a product needs communicating, needs to be available in the right place, and needs to be at the right price in relation to the competition.

The marketing communications mix elements: public relations, advertising, sales promotions and personal selling cannot viewed as single elements as they all have an effect on each other and overlap. When these mix elements are viewed in light of the AIDA hierarchy of effects model it can be seen that advertising, PR and publicity act as a vehicle to move awareness to interest and/or desire. Likewise, sales promotions and personal selling move desire to action. PS2’s marketing communications therefore reflect these promotional mix elements.

Sony initially created awareness by implementing PR, by releasing snippets of information to media sources around a year before PS2’s launch in 2000, thus creating initial awareness. This activity was gradually increased and so awareness was gradually turning to interest and in many cases desire. This would have cost Sony very little as editorial coverage is usually free.

A launch campaign was then introduced to mass media sources such as television, cinema and billboards. This would serve to reinforce awareness and interest aspects. A pre-order system was implemented through retailers as demand was showing to be high, but order requirements were not met. This shows a failing of the 4P’s place/distribution factor and could serve to tarnish PS2’s brand image. Consumers were angry and editorial coverage high. Gennaro Castaldo of HMV claimed though that “a fantastic by-product is that it will create massive media interest and can only help in marketing and sales of the product” . Therefore perhaps turning interest into desire. Also, this would extend the Christmas boom into New Year and beyond. The pre-order system shows evidence of a push strategy through retailers and then also the integration of a pull strategy once advertising commenced.

As of PS2’s launch, awareness and interest had been achieved, this would explain there being only a couple of mass advertising initiatives over the next three years. The first came in early 2001 with the launch of the competitions consoles in order to offset their advertising. Evidence suggests that this was decoded sufficiently as in Marketing’s weekly advertising recall analysis PS2’s television adverts were recalled by 51% of participants . This would be more of a brand reinforcement initiative in order to move PS2 into the evoked set.

Over the last couple of years very little mass advertising has occurred except software promotion, which also serves AIDA’s interest and desire aspects for the console. As seen in (Appendix 3 & 4) the PS2 is subject to a push strategy through retailers. These advertisements came from the national press and offer a sales promotion. These are direct response advertisements and serve to move awareness directly to action (purchase). As the retailers pay for this it involves no direct cost to Sony.

This allows Sony to finance elaborate displays within retailers, where potential buyers can play the console and hopefully move from interest to desire, resulting in action. This is aided by extra offers such as money off or free software, as well as personal selling through sales assistants. This helps to tip the potential buyer from desire to action.

Sony also sponsors the UEFA Champions League and FA Premiership. This is expensive but creates massive exposure to the brand. Not only target audiences attending matches are exposed but also those watching on television, therefore providing extensive reach.

The internet is also used. Sony’s homepage provides direct links to the dedicated PS2 website, showing software reviews and news. Those subscribing to the site also receive newsletters and e-mails with relevant offers.

This kind of direct marketing allows Sony to tailor product offers to those on a database of subscribed individuals. This kind of database is a very useful resource and would also have been compiled from those pre-ordering PS2 and those returning warranty cards etcetera after purchase. This again is intended to accelerate AIDA’s principles from awareness to action.
Currently PS2’s marketing seems to be concerned with moving from desire to action, as they currently do not mass communicate. They are therefore using sponsorship to create awareness/interest and then using push strategies through retailers to create action.

4.0 – Conclusion

The Ansoff matrix showed that PS2 was subject to product development upon introduction, whilst also diversifying (DVD capabilities) in order to extend the products market. PS2 was then released one year before upcoming competition in order to receive a head start in the market and build the Playstation brand.

The widening demographics of the gaming market create difficulty in defining a target audience. Psychographics are therefore implemented, thus creating surreal advertising in order to promote the products outcomes, rather than its performance. This then appeals to the desired audience through emotion, satisfaction being gained through PS2’s performance.

At the tactical level, initial awareness and interest was achieved through editorial coverage and a pre-ordering system. Upon PS2’s launch mass marketing was implemented and push strategies developed through retailers. This proves more cost efficient as retailers can develop localised push strategies and offer sales promotions coupled with personal selling, to act as a catalyst from desire to action (AIDA).

Sponsorship of football meanwhile carries on building brand strength as well as generating awareness and interest. This medium creates vast exposure for longer periods than a run of television commercials.

5.0 – Recommendations

Sony needs to ensure that the more powerful X-Box does not significantly gain market share in the next two years, before PS3 is launched. This is due to software on X-Box greatly improving and this factor is what makes PS2 so appealing. Games are set to become even more sophisticated and the X-Box will be more able to cope with this.

PS2 has online gaming capabilities and so this should be promoted now until the launch of PS3, as this is currently a very under promoted feature. This would aid initial interest and desire for the next generation console as the market moves towards online gaming. The ethos should be on preparing the ground for the next launch. This could be done using a push strategy as it can be identified that there is a shift in the locus of power from Sony to the retailer.

Creating awareness should not be focused upon as the product is now so well known. It could also be said that the product is now approaching the saturation stage of its life cycle, pending the release of the next generation PS3. Brand building should be the focus so that despite what the competition does, Sony is perceived to be the most significant brand that others are chasing. This should be done through continuing sports sponsorship and increasing shelf space within retailers. Continuing to promote software directly to the end user has the double impact of promoting the brand anyway.

Direct marketing should be made using Sony’s database. This could promote online features and peripherals such as the web cam which can be used online. Sales promotions can also be made like this, encouraging the purchase of such peripherals, as they could also be used on PS3.

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