Marketing the X-Box

IntroductionThe main cease of this project is to process me understand the marketplaceing process, which is required to launch a advanced triple-crown crossing. The peeled result I altogetherow for be trade is the Microsoft X encase. Millions of new overlaps atomic number 18 launched every year worldwide. nigh(prenominal) argon unsuccessful and be taken morose the market later a while. With off market a new result is very plausibly to fail. Microsoft ineluctably to market their bug out perpetrates beca intention there is so much choice in the market. commercialiseing pull up stakes give Microsoft a better catch of the market and nodes acquires and wants.I result be acting as the selling director indoors this comp about(prenominal). marketing is primaryally the management process, which is responsible for identifying possiblely salaryable fruits and them handleing them to customers.Microsoft is a multi-national successful caller with substan tial dough and is aiming at a mass market with the X encase preferably than a niche market. Microsoft result want to sell to as mevery a(prenominal) an an other(prenominal)(prenominal) places as realizable.A merchandising plan would benefactor improve the companys transaction and add gross revenue. Theres a heap to a greater extent to trade than just denote, marketing involves look foring the market and finding out what customers want. Developing and designing a w atomic number 18 that satisfies customers and consumers. Producing the flop amount and to the overcompensate quality of the product. Making sure that the customer is aw be of the product and what its active. Getting the footing right so that the product is affordable to customers, provided likewise allows the credit line to be profitable. Ensuring that the product is on sale in places convenient to the customers.This atomic number 50 be summed up using a term called the marketing strut or the 4P s, place, product, price and promotion. homeA product is un uni dramatis personaely to be successful if customers find it touchy to corrupt. So place is a vital part of the marketing mix. Microsoft motifs to cover how to get their products to the customer. Channels of distri only whenion take to be streamlined and utile. For a product to sell it must be in the right place at the right clip for customers to buy. Microsoft hires to find out where its convenient for customers to buy the X boxwood. The X buffet is likely to sell more in Electronics Boutique rather than New Look beca exploitout community go into New Look to buy clothes not blues consoles, only when mass do go into Electronics Boutique to buy computer games or games consoles. I get out need to look at Where to sell the X boxful and why? Channels of distribution. Selling to places that routine tarnish the companys dandy reputation. Where its convenient to sell to customers. Selling to as many places as possible (mass market). Dis prefers and advantages of selling the X stripe in true places. harvest-festivalMicrosoft impart to dissolve what product or range of products they atomic number 18 discharge to sell. They also set out to decide what quality of product they wish to remove and sell, what severalise to give the product and how it is to be packaged. Another stopping arcdegree is whether to attempt to leaf blade the product. I provide perk up to look at The product liveness turn and how it could affect the X encase. Why is the product is called the X Box. Product range. Does the product meet the needs and wants of the customers? look for and development of the X Box. Is Microsoft product orientated or market orientated? Importance of quality. Product contraryiation. Disadvantages and advantage of the X Box.PromotionMicrosoft needs to decide how shell to promote the products they turn and sell. The decision involves weighing up the relative comprise of each manikin or promotion and how shell to show their customers. They also need to consider the wont of advertising agencies. Promotion is all about communicating with potential customers, if the public isnt aware of the X Box then they are not likely to go out and buy it. Microsoft bequeath also have to be blow-by-blow not to go bad potential customers with advertising that discriminates against certain spate, e.g. race or gender. When looking at the promotion part of the marketing mix I allow for have to consider Different types of advertising, where to determination up them, why, the approach and will they be effective. Different types of promotions, where to use them, why, the cost and will they be effective. represents of the product intent cycle and how the affect the promotion of the X Box. Disadvantage and advantage to promotion.PricePrice is another element of the marketing mix. Microsoft must decide how to price its product. In making this decision Microsoft has to consider, what are the prices set by competitors, how price burn down be utilise to increase sales of the product, whether the price will cover be of production, whether customers are will to pay that set price and different set strategies much(prenominal) as skim or penetration set. When looking at the price class of the marketing mix I will have to consider a number of things Prices set by competitors. How price usher out increase or decrease sales. Does that price cover cost of production? Are the customers ordain to pay that price? Different pricing strategies much(prenominal) as skimming and penetration. Disadvantages and advantages to place that price.If the marketing mix is wrong, for example, the price of the X Box is likewise high and it is not selling in places convenient to customers, the X Box wont be as successful as it could be. The marketing mix is a vital part of ensuring a new products success, without it the product will fail.Market explore is a major part of this project. It can help me to find out the customers needs and wants, which will enable me to create the right marketing mix. The product needs to be affordable, arrange a profit and to be promoted and sold in the right places. It is also very big that the X Box is aimed at the right segment of the market. The market can be split into different categoriesAgeAge can be separated into years or layers of life e.g. child, teenager, adult or pensi unmatchedr. Microsoft chiefly targets adults with their existing products. With the X Box Microsoft is likely to target younger the great unwashed such(prenominal) as teenagers because they are more likely to buy the X Box rather than a pensioner.GenderDifferent products can be aimed at different genders e.g. make up is aimed at women and beer is aimed at men. somewhat hatful could say this is sexist but men are more likely to buy beer than make up. handicraftes have to be very metrical when advertising to certain gend ers as not to offend people. Microsoft are likely to aim the X Box more to males rather than females because boy feed to buy games consoles and computer games more than girls.Income/OccupationThe world can be segmented according to their salary or occupation. Microsoft mainly targets people with preceding(prenominal) average income because their products can be roughly expensive, but they have to be careful not to advertise this because people could get offended. Microsoft also has to make sure their product is affordable to as many people as possible but not lower the price too much in case they lose acquire.AreaThe area in which people live can divide the population. People in the northeast of England may have a different lifestyle to people the south of England, thereof their needs and wants will differ. Microsoft will need to promote the X Box in different ways according to location as to satisfy a mass market.Ethnic, cultural and religious groupsBusinesses need to be car eful with the production and promotion of its products when it comes to different religions. If a pipeline decides to produce its products in Asia because of cheap labour, people from Asia could refrain from buying that business product because they are offended. as businesses have to be careful when advertising its products as not to offend people of certain ethnic, cultural or religious groups.Socio economic groupings superstar of the most important ways of separating the population is the use of socio-economic groupings. Socio-economic groupings work like thisSocialGradeSocialStatusHead of householdsOccupation% of summarize UK populationAUpper midst ClassHigher managerial, administrative or professional such as doctors, lawyers and company directors.3.5%BMiddleIntermediate managerial, administrative or professional such as teachers, nurses and managerial.12-13%C1 humble Middle ClassSupervisory or clerical and junior managerial administrative or professional such as shop ass istants, clerks and police force constables.22%C2Skilled Working ClassSkilled manual workers such as carpenters, cooks and train drivers.32-33%DWorking ClassSemi dexterous and unskilled manual workers such as fitters and store accompanimenters.19-20%EThe Poorest In orderlinessState pensioners or widows, casual or lower grade workers, or long-term unemployed.10%The Product flavour CycleThe Development periodProducts start life in the development gunpoint. This is where the product is designed and also where the majority of the marketing is done. There are no profits at this stage, only costs. Microsoft will have to make up for the money wooly in the increase stage of the product life cycle.The Introduction StageThis is the stage where the product is launched. Profits and sales are minimal in this stage, but it doesnt last too long if good advertising is utilize to make the customers aware of the product.The Growth StageSales and profits are increasing rapidly in this stage. Microsoft will have to consider what pricing strategies and promotions to use to keep the X Box in this stage as long as possible.MaturityIn the due date stage, the product reaches a peak in terms of sales. Research and development costs are likely to be paid off. The product could be profitable seemly to be financing the development of new products.SaturationTowards the end of the maturity stage the market becomes thoroughgoing(a). Competitors bring out products to experiment and take sales away. It is likely that Microsoft will not be able to sell any more of the X Box at this point.DeclineEventually a product is likely to go into decline, sales will drop dramatically. Microsoft could try extension strategies at this stage to try and increase sales slightly or they could just withdraw the product from the market.The product life cycle can affect a lot of the marketing mix, for example, which promotions and pricing strategies to use at certain stages in the product life cycle. A Business would like to be in a sellers market where customers have belittled choice but to buy from them. In a buyers market though, business have to be market orientated and the greater is the need for effective marketing. I think Microsoft is in the buyers market. Although they are a major company with substantial profits, Microsoft still have competition such as small software companies. The product X Box is a slightly different product from what Microsoft usually sells.Microsoft specialises in software and hardware for PCs, the X Box is a games consol, and so the main competition will be Sony and their Playstation. Although the Playstation is a very successful product it may be entering decline in the product life cycle because the Playstation has been around for a while. When the Sony Playstation started to enter the maturity stage Sony launched a new product the Playstation 2, this would be the X box main competition.I think Microsoft could afford a very round budget beca use the companys profits are very large, the fact that they have spent a lot of money ontogenesis the product could affect the budget for marketing the product. I estimate that the budget would be somewhere around 20 million.Im going to cover variant areas of marketing, which will accommodate* Analysing the market, finding out what customers want, where scoop to sell it and find out about the competition and target market.* Market Research, desk enquiry and field enquiry.* The Product, product differentiation, ways of differentiating the product, branding and retailing.* The Product Life Cycle, look at what similar products have gone through in the five main stages. Development, introduction, growth, maturity and saturation, and decline.* Pricing, competition, costs of making, affordability and pricing strategies.* Demand and Supply, what people want, how much they want and what they are free to pay.* Promotion, advertising packaging, direct station etc.* Place, channels of di stribution.* Retailing, how retailing within the company would affect marketing.* Constraints on Marketing, the law, morals and the market and pressure groups.They are many disadvantages and advantages of marketing. Disadvantages include things such as, cost and constraints on marketing. Constraints on marketing are ethical considerations, the law (Trade Descriptions make believe 1968), orders of practice (Advertising Standards Authority) and pressure groups. Ethical considerations include things such as labour, many multinational companies have been criticised for using workers in the Far East because they are relatively cheap, and the business want to take advantage of the lower costs of production.Nike was once criticised by the press because of the high prices they charge for their goods and the low advantage paid to workers and low costs of production. Microsoft will have to ensure that they dont put too much of a profit mark up on the X Box, and also make ensure their work ers are treated fairly. new(prenominal) ethical considerations are the use of promotions and advertising such as the use of images in adverts. Many companies have been attacked by pressure groups because of the content of the adverts they use, such as images of beautiful woman that lure men into buying the product and learning included in the adverts. For instance should a washing pulverization manufacturer claim in an advert that its washing powder washes whiter than other powders on the market when there is no scientific proof that it does?Should tobacco companies promote their products when they damage peoples health? If people are really shock by an advert they may consider not buy the products produced by that company, then Microsoft will have to be careful when choosing methods of promotion. The law ensures that advertising does not fool the public. The Trade Descriptions Act 1968 states that is illegal for products to be falsely described for example Microsoft couldnt adv ertise the X Box as if it comes with a free TV if it doesnt. The government has encouraged businesses to adopt a code of practice as an alternative to passing laws. Codes of practice are rules, which businesses voluntarily agree to keep, but have no legal status.Advantages of marketing includeHelping the business to get a better mind of the market, marketing also lets the business to know what price, to set where to sell the product what promotions to use and what the potential customers want from the product. Market research will also recount the company whether there is a demand for the product in question.Marketing will spay across different countries because different countries have a different way of life. For instance people in America can afford to pay a lot more for the X Box than people in the poorer parts of Africa and Asia.Market ResearchMicrosoft needs education if they are to make good decisions. They need information about their target market to help them create a successful marketing mix. superstar way of gaining that information is by carrying out market research. Market research is a cost-effective way of finding out what people believe, think, want, need or do. There are various types of market research. Microsoft needs to decide what market research methods are most likely to give them the information they need.Businesses, which are mainly product, orientated risk spending a large amount of resources launching a product, which proves to be a failure. Researching the market helps ignore the risk. Microsoft should focus research and design effort onto products, which have a fortuity of success in the market place. When the product is launched a carefully researched product stands little chance of failing.Stages of Market ResearchMarket research will help Microsoft to find answers to questions about the market.* What is the target market for the X Box?* How can Microsoft use the X Box to increase market theatrical role?* What is the ri ght price to set that will maximise profits and be affordable to as many people as possible?* What are the right promotions to use that will appeal to Microsofts target market?* Wheres the best place to sell the X Box?* What do customers want and need?* What is the demand for the X Box?* What are existing patterns of sales for other games consoles?I then need to decide what information might help answer the questions, then I need to decide how best to get in this information. The information is then collected and analysed. Finally Microsoft has to make a decision about what to do in the light of the information gained.Desk ResearchDesk research involves the use of collateral selective information. This is information that is already available both(prenominal) within and foreign the business.Information within the businessMicrosoft collects information routinely. Invoices for instance will tell them how much they sell and who they are selling to.Information outside the businessBu sinesses can also collect information, which is available from sources outside the business such as* Internal sources such as sales invoices, works and accounts.* administration promulgated statistics such as consumer spending figures, reports such as monopolies and mergers military commission reports.* The Media reports in newspapers, magazines on radio and on TV.* Trade associations statistics or reports published by national organisations such as the TUC, the CBI or chambers of craft or industry associations such as the Engineering Employers Federation.* Research organisations reports inclined(p) by specia itemization market research organisations such as Mintel or Mori articles published in academic journals such as university journals.Field ResearchField research involves the collection of primary data, information that no one has yet collected. It is collected specially for the particular piece of research. Primary data is collected through direct investigation, usua lly through observation, cogitation or experiment.To help me create my marketing mix I employ both secondary and primary research. I collected primary data in the form of a questionnaire that I asked 50 people. I used secondary data from the Internet. I used the Internet to find out about Video Game sales and I found a report by PC Data about home Internet users planing to purchase console or PC games during the 2000 holiday season, and that PC and console shimmer is no longer a male-dominated domain. This was very useful research and it helped me a lot when putting together my marketing plan. I didnt find any information from the media or the government because of lack of time. vicenary and Qualitative ResearchThere are two main types of survey data quantifiable, and qualitative.QuantitativeQuantitative research provides numerical data.At the completion of a vicenary project it is possible to say (for example) what proportion or percentage of the population fall into different groups those that want something, those that would be likely to buy something, those that are in favour of a particular policy or plan, etc.The essence of quantitative research is that every respondent is asked the same serial publication of questions.Quantitative research can be done in various waysBy face-to-face referenceing, either in the street or, for more complex projects, in peoples homes. This was the traditional approach to data collection, and remains important. In-home work is particularly suitable for lengthy interviews, or for some sensitive subjects. The understanding that can be established between the interviewer and the person world interviewed (the respondent) can help to ensure that detailed and thorough information is obtained.By telephone.This is a fast-growing form of data collection, is somewhat less expensive per interview than face-to-face, and can provide data more quickly in some cases, overnight.Telephone research would rarely be suitable for length y interviews, but it can be ideal for smaller-scale, fast turn-round projects both amongst the public and for business research.Both face-to-face and telephone research involve the most basic form of data gathering, talking to people. There is one other form of quantitative data collection that should be mentioned postal and self-completion research, which is the cheapest form of quantitative research, though it can take a relatively long time to gather data by post. Self-completion questionnaires can be handed out, for example, at exhibitions, on aircraft, or in town centres, to get peoples views.Self-completion questionnaires must be kept simple and the researcher has little find out over whom, or how many people, return the form.Another form of quantitative research is omnibus surveys. These are useful for those with small budgets and relatively fewer questions to ask.Qualitative ResearchQualitative research, though it cannot provide numerical data, provides understanding of h ow or why things are as they are. It can be used on its own or to help in the development of a questionnaire for a quantitative study.There is no fixed set of questions and therefore no assumptions about what is, or is not, important. Instead there is a list of topics, problems, or possibilities to be explored. The form and nature of the discussion is heavily influenced by the informants own concerns or assumptions.Qualitative research is the way in which common or relevant peoples attitudes and beliefs can be explored, and ideas can be generated. It can be used for everything from testing reaction to a potential new advertising campaign, to exploring staff attitudes to a new management structure or procedure.There are various sorts of qualitative research, including the following.* Unstructured interviews with a one informant, base on a framework of themes and topics. The interview is adapted to the individual, and the interviewer feeds off and responds to the respondents replie s.* Focus groups (or group discussions) involve a similar approach but bring together a number of relevant people typically about eight and therefore benefit from the interaction between the different personalities and experiences in the group.I used quantitative research because I indispensable to find information quickly and easily, I think qualitative research would have been a lot more time consuming and will have used a lot of resources. I decided the best way to collect information about the market was to use a survey. A survey cant ask customers for their opinion. Only a fraction or sample of customers can be surveyed. To be useful, the sample chosen must be a representation of all consumers. In a haphazard sample, every potential respondent has an equal chance of being chosen. stochastic numbers can be used to do this or it could be done by picking people out of a hat. It is much quite difficult to construct a truly ergodic sample. So a cheaper and quicker method is t o use systematic sample.This is where every centesimal or 1000th person on a list such as the telephone book is chosen. A systematic sample is not truly random though and therefore the results may be less reliable. In a quota sample, the sample is broken down or stratified. unrivaled problem with a quota sample is that any people who fit the description can be asked to complete the survey. So Microsoft wanting to find 50 people aged 13 30 to complete a survey could ask the first 50 13 30 year olds who came out of Electronics Boutique in Bedford. This may not be very object lesson of all 13 30 years olds nationally. A stratified random sample may get round this problem. It is a quota sample where all the respondents, the people being interviewed, must be chosen at random. Microsoft would have to find some way of selecting people aged 13 30 through pure chance.I used a quota sample, I asked 50 people in Electronics Boutique my questionnaire. I used Electronics Boutique because a lot of people go in there to buy game consoles and other computer related products, and asking this people would give me a good idea of the target market. I think my data is quite reliable because the people I asked my questionnaire to are the people that are most likely to buy Microsofts products.PricePricing StrategiesThe product should be launched in November ready for the Christmas rush. The pricing strategy skimming should be used in the introduction and the growth stage of the product life cycle. Skimming is setting a high price initially and then lowering it later on. This is almost always used for products that incorporate new technology such as new DVD players and PCs. Some people are free to pay high prices for new technology, the price of the X Box will be set high at first to catch this end of the market. By doing this Microsoft can maximise their profits and cover the costs of developing the X Box.When sales start to slow down Microsoft should lower the price and us e a different pricing strategy. To ensure sales keep increasing half way though the growth stage Microsoft should change the pricing strategy from skimming to market orientated. This is where the price charged is based on analysis of the market and its characteristics. Market research might need to be undertaken again at this point to ensure that Microsoft knows what the customers are willing to pay. Market orientated pricing should be used at this point because the top end of the market is likely to be saturated, Microsoft will need to lower the price of the X Box slightly to provide for the people that arent willing to pay as much.Using market orientated pricing will therefore help keep sales rising and the X Box will appeal to a broader market. When the sales of the X Box are slowing down it could be because of competition. This is when Microsoft will need to use competition based pricing because new games consoles will be being launched and the X Box wont be new technology anymo re. Microsoft will need to lower the price a lot to compete with the new technology and keep people interested.Psychological pricing could be used throughout the life cycle. This is when a product is priced at 99p instead of a pound so that the customers automatically think its cheaper.I dont think Microsoft will need to use cost based pricing with the X Box because Microsoft makes so much money off existing products going into debt wont be a problem. The X Box will soon make up for the research and developing costs in the growth stage of the life cycle. Penetration pricing also isnt appropriate for the X Box because new technology doesnt rise in price as it becomes more popular it starts off at a high price because of the cost of development.Price to be SetIn the introduction stage of the life cycle the X Box should be priced at 299, in the growth stage the price should be lowered to about 249, when the market has been saturated the price should be lowered again to 199 and when the product goes into decline it should be priced between 99 and 149.Factors Affecting the Price comprise of promotions and advertising Cost of research and development Customers needs and wants Competitors Demand Costs of distribution