Problem Statement: Sales of the Nintendo Wii have been much higher than initially forecast. As the 2007 holiday season approaches, Nintendo does not have enough capacity to meet demand. The shortage will negatively impact profit and potentially cause lost market share. The immediate issue is adjusting the marketing strategy to handle the product shortage and minimize the negative market effect. Situation Analysis: BACKGROUND: Nintendo was initially founded in 1889 as a card company. The Company moved into the electronic entertainment industry in late 1970.
Nintendo went on to release its own home console in the 1980’s which was an instant success, subsequently dominating the video games market in home video games consoles and handheld consoles. In recent years, Nintendo has met fierce competition from Sony and Microsoft. This competition resulted in Nintendo’s market share dropping from 80% in 1992 to a low of 16% in 2003. Nintendo realized that markets, competition, and product life cycles were changing at a fast pace, and most of the profits were going to the innovators.
In order to win back market share, Nintendo has developed an innovative new game console named the Wii. OBJECTIVE: The current objective for Nintendo is to effectively develop a marketing strategy to manage product sales through the 2007 holiday season. The long term objective for Nintendo is to maintain its market leader status, communicate customer’s needs in an effective way and fulfill customer’s expectations. S. W. O. T. ANALYSIS: Strengths: Offer differentiated products from its competitors; •In 2006, Nintendo won more awards than other company, including “Best of Show” award, and “Best Hardware” award; •More competitively priced ($249) than its competitors while still earning a profit ($50) as the Wii console is inexpensive to produce; •Brand name recognition (short, simple, easy to read and remember, internationally understood, and suggestive of product benefits—“ii” images gathering people to play); •Strong support from game evelopers to shift more resources to the development of Wii title; •Constant media coverage from newspaper headlines drew attention to the Wii console; Weaknesses: •Nintendo lost significant market share after it reached its peak of success; •Inability to keep up supplies with international market demand; •Does not provide extreme high definition and DVD/Blue-ray capability; •Negative media-individuals had injuries due to the controllers slipping out of users hands; Opportunities: A recent movement in society towards healthier lifestyles. Wii meets the demand by incorporating physical movements when playing the game; •There are only two competitors which directly compete against each other with graphics, leaving room for Nintendo uses a different selling feature; •Potential market for video game consoles for non-traditional age groups (casual gamers and non-gamers) over age of 35; Threats: Consumers might turn to competitor’s product to satisfy their wants due to the Wii shortage problem; •Sony and Microsoft may offer more attractive deals to fight back for market shares; •Substitution is a significant threat and can occur within the existing competitors. Conclusion Nintendo offers an innovative product that offers good value to consumers. The threats from competitive brands are high. However, Nintendo is offering a unique product which is in high consumer demand.