Marketing Assignment 2 Group Project (Marketing plan for Xbox Series X ) PDF

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An elaborate Marketing plan for Xbox Series X
it goes through all the criteria that are needed
word count 4000 by right
this document has 4500+

Tips ensure that you start your assignment early as this takes up a lot of time to research on !...

Description

Executive Summary The Microsoft Xbox is trying to establish Xbox as the video gaming console leader in the gaming industry. Thus far, Xbox has sold over an estimated amount of 100 million consoles since its launch in November 2001. Microsoft has reported that for the 2021 quarterly gaming revenue, it made $3.7 billion as Xbox had a sudden spike in hardware sales of 172%. Over the next couple of months Xbox has set out objectives to be completed such as looking to be innovative in their subscription plans for their game pass holders. The market in which Xbox is competing is one that is known as oligopoly where they have two main competitors who exist which is Sony PlayStation and Nintendo. Currently, PlayStation holds most of the share market of 57.4%, Xbox with 42.15% and lastly Nintendo with 0.31%. As a result of the Covid-19 pandemic, sales of the Xbox have soared as the virus continues to grip on the economy. Microsoft reported that as many people are now forced to stay at home, this has increased demand for Xbox gaming consoles pushing the firm’s overall revenue to 17% which was a record $43.1 billion in 2021. The target demographic of Xbox One gamers are between the ages of 25-35, followed by those in the 35-44 bracket. The main attraction of Nintendo's games is that each one can be customized to fit any situation. Also, with the help of the ongoing pandemic, its Animal Crossing game was able to garner 11 million gamers by allowing them to virtually live on their dream island. Nintendo has also become a competitor of Xbox because of its unique pricing model. Sony PlayStation who are the leading gaming entertainment in the industry have many qualities which has put them in a position where they are today. For example, their exclusivity of games, quality of products and lastly, their highly innovative ideas has contributed to the revolution of consumer products. Even though Xbox may not be the leading gaming company in the industry, they are closing onto PlayStation to claim that spot. However, when Sony PlayStation and Nintendo release their brand-new consoles into the market, Xbox will have to come up with a better one or else they will lose out their grip in the industry. Continuation efforts is the only way for Xbox to be the best of the rest in the gaming industry.

Company Mission The mission statement of Xbox, found from the website is as follows, “Xbox’s mission is straightforward: bring the joy and community of gaming to everyone on the planet. To achieve that, we aspire to empower everyone to play the games you want, with the people you want,

anywhere you want”. Phil Spencer, Head of Xbox feels that gaming helps to bridge and create bonds which leads to creating empathy among people around the globe. Xbox’s and Microsoft’s mission mirrors each other according to Microsoft CEO Satya Nadella as to empower every human being and organization in the globe and to strive. Company Objectives Microsoft has a set of major objectives to be accomplished over the months, where the company is looking to grow and be innovative in its approach. It has new subscription plans for Xbox Game Pass holders so that more gamers can encounter the games through devices, continents, and economical standards. Xbox is also working with network providers on new purchasing methods, which enables customers to purchase both a console and Game Pass on a low monthly subscription instead of paying cash up front. Over the weeks and months, Xbox Game Pass Ultimate members will be opened to cloud gaming on the browser such as Edge, Chrome, and Safari support in all devices. Additionally, Xbox applications will include cloud gaming right on the PC and incorporate it into their gaming experience such as having trials before download. Market Overview Video gaming consoles such as Xbox offer roleplaying, multiplayer, and accessory games, and accessories for the home entertainment market. We also can experience the console via plugging it into the television set or specified monitors to witness the gaming experience. Within the same market, companies such as PlayStation, Nintendo and Sega pose a stern competition to Xbox as direct competitors to them.

Market Size According to Safe Betting sites, 20 years ago, Sony and Microsoft started shooting each other down in the video game console war, and it doesn't seem like the competition will slow down any time soon. The Xbox currently has a 42.15% share of the market, while Nintendo, once regarded as a pioneer, now holds a mere 0.31%. While Xbox is closing in on the gap to PlayStation, PlayStation still holds the majority share of the market with 57.54%.

Figure 1 According to the latest figures, Sony PlayStation 4 sales decreased to 114.19M units in November 2020 whereas Microsoft Xbox One sales increased to 48,69M globally. With a sales total of almost 15.6 million units worldwide, Nintendo Switch was the top-selling console in 2020. Currently, Xbox is used by millions of users in more than 150 countries worldwide. It will generate $585 billion in revenues by 2021.

Market Research A survey was conducted between 40 randomly selected Singaporeans who are known to enjoy playing video games, the results are shown below. The purpose for the survey was to gather information on the age range of “gamers” and which platform or console they use to play video games. Through this we will be able to position the Xbox in the market through this market research.

Figure 2: Age group of participants

Figure 3: Gender of participants

Figure 4: Favourite pastime activities of participants

Figure 5: Occupation of participants

Figure 6: Owning a gaming console

Figure 7: Hours spent per day playing video games

Figure 8: Popularity of gaming consoles based on demand of participants

Figure 9: Factors participants consider when purchasing gaming consoles

Figure 10: Is subscription fee a factor when buying a gaming console Through the market research done above, Xbox does not have a competitive edge as seen in Figure 8. Through the survey, most people looking to buy a console to play games would prefer buying a Playstation 5 (PS5) . The reason for that is the variety of games. Sony's PS5 for example has games that are only released on their platforms. One example would be Marvel’s Spiderman which was limited to only the PS4 previously while the second volume of the game was made available to the PS5. Xbox however does hold its own in that they do not require a subscription fee. This has earned them some popularity as shown in Figure 10. Unlike the PS5, Xbox allows free wireless transmission thus allowing its consumers to be able to play online at no charge as compared to

the PS5 and Nintendo Switch which require a subscription to play online or use their wireless services. However, though requiring subscription fees and still being a cause for concern for gamers, it doesn’t stop them from purchasing the PS5 as it is still more popular than the Xbox as shown in Figure 8. Another survey was done to see between the two most leading brands in gaming consoles, Microsoft (Xbox) and Sony (Playstation). A great deal more would prefer the latter. “Of the 1,397 people surveyed, 26 percent said they are likely to buy the Playstation 4 compared to 15 percent that chose the Xbox One.” (‘Survey indicates more interest in PlayStation 4 over Xbox One’ 2013, Para 2). The survey also noted that a large number of the younger survey participants preferred the PS4 to the Xbox. (‘Survey indicates more interest in PlayStation 4 over Xbox One’ 2013) Therefore, Xbox would need to improve its product to be able to target its younger consumers better. Trends There are many major macro-environmental trends that cause severe change to the retail market for home entertainment game consoles. We categorize these trends into six categories. Demographics Xbox gamers can be classified as casual and hardcore gamers. According to a market research conducted by Microsoft, it shows that hardcore gamers make up most of the market segment for Xbox One Console. Research suggested that the new hardcore gamers would be found in Asian markets such as Taiwan, Hong Kong and Singapore. Ageing population and low birth rate in countries such as Singapore (Population Whitepaper, 2013) lead to a reduction in sales for Xbox, since fewer young people will be buying their consoles. According to the data, the majority of Xbox One gamers are between the ages of 25-34, followed by the 35-44 ages bracket. As a result, promoting the product to a larger demographic may be necessary to hold onto the existing market while possibly increasing its value. Economic As a vendor of video game add-ons, Xbox is also able to increase profitability and market share. Income is an important factor in the sale of the product. Sales will be better if the population has a higher disposable income. Also, it is dependent on the rates of the different products and services available on the market. Xbox has been liable to losses due to fluctuations in the currency rates. In addition to these changes in monetary policy, new policies like GST or duties will also affect Xbox's price and affect sales directly. Environmental As part of their commitment to accelerate global progress, both Microsoft and Xbox want to make a better future sustainable. One of their biggest targets to hit before 2030 would be to reduce carbon emission by 75% (Microsoft, 2020). They believe this can be done using various renewable energy sources. Also, by using cloud computing programs, the companies was able to

reduce resource usage by 20% and save money on their electricity bill as well, which was also beneficial.

Cultural As a subsidiary of Microsoft, Xbox strives to reach markets with different cultures, morals, and religious beliefs. The marketing campaign would have to be able to appeal to this diverse culture if they were to succeed. Based on the research conducted by Microsoft revealed that the majority of Xbox One console hardcore gamers come from Asian countries and one popular country that Microsoft has not been able to attract would be Japan. It is because Microsoft has not adapted its approach to Japan's gaming needs and has not addressed the local gaming market's unique needs. As a rule, disruptive business practices don't go over well in Japan. The country is more formalized and regulated than the U.S. or Europe, forcing foreign companies to adapt to work within that framework or else fail (Barder,2021). In Japan, there is also a long history of gaming and a distinct culture that is uniquely Japanese. The message of merely coming in and disrupting that market and making money is not the right one here, especially when said Japanese companies are already profitable. Therefore, for Xbox to venture into similar markets such as Japan, they will have to come up with a marketing campaign that could appeal to this diverse culture. Political Factors Xbox is a subsidiary company of Microsoft. Microsoft being a global brand is then subjected to various political conditions because of the foothold they have in several countries, all with their own rules and regulations set in place by their governing bodies. Xbox however will not be pressured by the political world as it belongs in the gaming industry. What needs to be done is the management of where it is manufactured. Microsoft has factories dedicated to the assembly of their consoles in China. The US-China trade war (‘Understanding the US-China Trade War’ n.d. 2021) that is still ongoing would be a cause for concern for the company and needs to be closely monitored.

Technological factors Xbox being a brand that provides its customers “gamers” with the proper consoles to play their video games on. Being in such an industry where the competition is always tough and lagging behind would mean that the product would very quickly be irrelevant as gamers jump to buying newer and better products to keep up with the need to play a particular game. The research and development department of gaming companies like Xbox have to constantly shoulder the responsibility to continuously come out with newer, better products to continue to be competitive in the market. Should the technological factor be lagging at any point, it would result in a decrease in sales and revenue.

Legal Factors Xbox has expanded globally since it first launched into the market and going forward it plans to extend its reach further. To do so, Xbox needs to be constantly updated regarding copyrights and patents existing within the region they are looking to enter (Team n.d. 2019). Apart from keeping up to date on copyrights and patents, there are further laws that need to be looked at internally. Xbox will need to comply with the various labour law requirements associated with its product and operations (Team n.d. 2019). Having its operations running in China for example, the factory in that region would have a different set of laws as the one back at Microsoft Headquarters in Redmond, Washington, U.S.

Competitors

Nintendo Swot Analysis Strengths Nintendo has a broad variety of games from action to adventure, puzzles, strategy games, educational and many others. Nintendo’s wide variety of games caters to every situation. During the period where cities are in a lock down state, Nintendo’s Animal Crossing game attracted 11 million gamers by allowing the gamers to live virtually on their dream islands. Nintendo has a unique pricing strategy as it charges premium prices from its customers when it first launches its products in the market then gradually decreases the prices over time once they attract enough customers.

Weaknesses One of the Product Failures that Nintendo has is Wii U Console. It was overhyped, low quality, overpriced, and marketed inconsistently, leading to product failure of epic proportions right from the launch. Wii U’s failure eroded trust and Nintendo’s reputation. Nintendo has been heavily reliant on Nintendo Switch. The Switch is one of the most successful selling products of Nintendo as it contributed to 85% of the company’s total revenue. If the sales of the Switch drop, there will be a huge negative impact on the overall sales.

Opportunities Nintendo has said that Virtual Reality (VR) and Augmented Reality (AR) are the future of gaming, and it's time to exploit these technologies to improve the gaming experience further. Investing in Mobile Games: the popularity of mobile games is increasing rapidly, and it is expected to reach $95.4 billion by 2022. Nintendo can tap into this lucrative opportunity by offering mobile-friendly versions of its popular games.

Threats Serious competition, as Nintendo operates in a market that is very saturated with fierce competitors such as PlayStation and Xbox who are the top and competing with them. Despite having a higher pricing strategy, PlayStation and Xbox have stronger market shares compared to Nintendo which struggles in being sourced in the larger markets due to the difference in games being made. Piracy websites like torrent are a great threat to the business of Nintendo. The piracy attempts have massively increased with the growth and development in the technology.

Sony Playstation Swot Analysis Strengths Exclusive games for Sony Playstation, there is a wide range of games which are only available on the Playstation. Games such as Uncharted, Marvel’s Spider-Man and many others which are only exclusively available on Playstation. The platform sells to the targeted gamers who prefer to play these exclusive games. Quality Products, Sony offers high-quality products consistently is easier said than done without the interest of esteemed customers at heart. Sony’s huge investments in R&D has enabled the company to provide high-quality products consistently. Highly Innovative, Sony is one of the most innovative companies having invented or contributed to the development of revolutionary consumer products. Sony has contributed immensely to the consumer electronics market.

Weaknesses Frequent upgrades: Consoles are closed operating systems where frequent hardware updates means that the console has to be upgraded, the games also come for the latest console and not for the predecessor. As a result, gamers have to compromise by changing the console every few years which is a huge expense and a problem for gamers. Games Prices, the price of games is higher as compared to Xbox and skimming price method is used. Many gamers have now left their consoles and play games on PC because of the high price of the games.

Opportunities Subscription such as Netflix or Amazon prime, Sony can also have movies and games subscription via its PlayStation platform and they could also invest on having a streaming platform to let gamers showcase their games. Virtual Reality is the complete gaming world that has already evolved to virtual reality which is introduced by Oculus Rift from the house of Facebook. Virtual reality helps in gaming and can also be a social platform too. As a result, the console market leader can expand really fast in the market if it launches its own virtual reality console. The competition of Virtual reality games will soon begin but Sony Playstation will have the upper hand due to existing distribution channels.

Threats Direct competitors have been a major threat from competitors such as Microsoft. Microsoft has been a threat and a leading competitor with Sony for a while. Xbox being a stronger competitor that allows their online gaming to be free to play. Mobile gaming is a huge indirect competitor to PlayStation. Mobile phones are becoming more capable day by day to deliver games which are excellent in graphics. As mobiles are able to cast games on TV and you can directly pair the mobile and TV to play games. Thus the major indirect threat to the whole console market and therefore to PlayStation is the mobile gaming market.

Buyer Behaviour The main target market for Xbox consoles are for gaming enthusiasts, casual to hardcore. Where casual gamers are only able to commit a fraction of their time to play as they have other responsibilities that take priority. Hardcore gamers on the other hand, are able to commit more time into honing their skills in their craft. From the demographic above, we are able to understand their buying decision across different age groups. Firstly, the segment ranged from individuals 21-25 (young adults), showing the main bulk of consumers. At this age range, they are assumed to be working adults part time or full time and are able to afford the consoles for

their own use. The next segment from ages 16 – 20 are unlikely to make a purchase on their own accord as this age range is assumed to be schooling and would rather have someone older to pay for them. Factors that affect the purchase decision include the opinions and recommendation from family members, friends or from their online gaming communities. After considering other alternatives in the market, the buyer may finally come to solidify their decision.

Types of Buyer Behaviour The Xbox series X will have a small amount of dissonance-reducing buying behaviour with the main issue that buyers will face is the steep price tag, setting you back USD$ 499 or SGD$700. Should other competitors offer better service, quality or value, consumers may experience post purchase dissonance whereby they start to notice certain flaws and issues with the product and find positive reviews of alternative products. One way Microsoft tackles this is by providing a quality subscription service that enables consumers to tap into a wide array of crowd favourites series to choose from, being able to beat the crowd by providing you access to titles the same day they release. Although, there might be a steep price gap, Microsoft provides quality service and quality build in their consoles. Assuring buyers that their purchase is one that will be worthwhile.

Social factors With the boom of the internet age, media has changed the way we communicate. From snail mail ...