Differentiation strategy

Nintendo is part of the video game console industry and underlined its position as an innovative design powerhouse with the introduction of the Wii. They took a risk and challenged the prevailing business model of the video game industry and introduced a product which went against the grain of thought from its main competitors Microsoft and Sony. Historically this market was incremental, with standard increase in sales with each new product which was released. Initially the Wii was competing with products which had a foothold in the market, products such as the Sony Playstation and the Microsoft Xbox along with variations of each.

What differentiated the Nintendo Wii from these other products was its ability to appeal not only to the traditional gamer but also to a much wider audience, an audience of non gamers’ who were previously neglected and could perhaps be a source for future growth. From what we have learned, in lectures [6], the advantage to this method of approach is that their market segmentation and customer focus is much broader than previously adopted by both themselves as a company and also that of their rivals. Nintendo have managed to open the gaming doors to people of ages from 3 to 112 years.

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With the introduction of the Wii Nintendo have managed to radically change the market to which they are associated with. In attempting to do this Nintendo took a gamble. They initiated an idea which had first surfaced in 2001 and developed it into the opportunity which it became when launched 5 years later [7]. Their initial concept involved looking at a new form of player interaction in which console gaming power is not everything; a belief stated by their gaming designer Shigeru Miyamoto “too many powerful consoles can’t co-exist” [8].

Contrasting to their rival’s beliefs that they developed the Wii at a much lower cost and hence affording to sell it at a lower value than the more conventional, powerful and graphic laden consoles they were in competition with. To briefly outline the consoles main features and benefits which will be expanded in further detail in section 6 the Wii is an Innovative and simple game-play console using a mix of motion sensitivity and aiming device technology. Even though it is the first of its kind to offer this it can be bought at a very affordable price which makes it appealing to a large audience of all ages.

Contrasting to the stereotypical image computer games portray it offers the chance for gamers to stay healthy while still having fun as an individual or as a group. This is reflected by their release of the Wii Fit range in December 2007 which was marketed as a way to get families exercising together. On the Nintendo Wii homepage it states “Wii is social and active entertainment that brings the whole family together” [12]. The differentiation strategy used with this particular product was very cleverly put across.

The Wii developed a new innovative technology which revolutionised the gaming world. The new technology gave the Wii the edge on the gaming world and allowed them to enter a new and unexplored market. Generally video games were targeted to the younger marker between the ages of 5 and 22. Nintendo`s aim was to broaden the market to people of all ages in this particular instance. A feature of the product strategy was its redesigned controller which makes it easier and has a more natural feeling when playing games.

Continuing on from this a number of addons have been created specifically for the console which portrays the unique image it has. Not only did Nintendo manage to significantly widen the age group associated with the computer console industry they also attempted, and we think it is fair to say achieved to break the economic barrier aswel. Contrasting to their rivals Sony and Microsoft who were charging between $350-$500 for their products the Xbox and the Playstation [9]. Nintendo priced the Wii at a very affordable price of $250.

It was this significant price difference accompanying the fact that the Wii games sold at $10 less which meant that they offered much better value. As a promotional strategy Nintendo included a free game with each unit sold which was unlike their competitors. An interesting aspect of the Wii is that it offers WiFi connection where high speed internet is accessible. In 2010 Wii reached an agreement with Netflix which allowed Wii users to go live and stream thousands of movies and tv shows directly to their television.

Company advantage and possibility of competitor substitution From the beginning Nintendo had the massive advantage of timing. By arriving with this new technology they instantly had the advantage over their competitors. As they proved to be so successful potential competitor substitution followed not long after. Sony introduced the Playstation Move, a hand held device much like the Wii remote which could be used in the same manner. Despite being a more advanced version of the Technology used by the Wii they still cannot manage to get a foothold on the market stolen by it.

Microsoft was slightly more creative and innovative and produced the Kinect. Unlike the Wii the Kinect was completely hands free. And Similar to that of Sony these sales are refined to their existing customers rather than stealing customers from the Wii. These products will be further developed upon in section 6. Future actions Carrying on from the worldwide success of the Wii will prove to be quite difficult. They now have a reputation gained and it is of paramount importance that they uphold it with using their innovation skills.

Using the Wii`s success they continuously plan new, innovative ideas for the expansion of their Wii hardware. They also succeeded the Wii with a device called the “3Ds”, a portable gaming device that plays with touch screen in 3D. Obesity is a huge problem in today`s society. Already the Wii has brought out games like the Wii fit for example. This has proved to be a huge success. We would recommend that they continue that trend and think of new innovative ways which the brand can be expanded in an exercise friendly manner. This would help combat the disease and ensure the longevity of their product.

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