![3
Executive Summary
Over the past few years, Microsoft’s position within the technology sector has slightly
declined. Unfortunately, Microsoft’s smartphone division has suffered the most, holding just a
3% market share in the United States. Understanding its innovation obstacle, Microsoft will take
advantage of the company’s current downturn in order to reach a larger target market. As a
result, Microsoft is preparing to launch a new software feature for the Lumia smartphone.
Breaking away from the limitations of being an ordinary smartphone, this change allows the
Lumia to serve as both a remote control and game controller for the XBOX.
Leveraging the XBOX to market the Lumia will bring forth the traffic it needs in order to
achieve two marketing goals: a 3.5% increase in market share as well as reaching 100% of its
current users and 50% of its potential consumers within the first year. Despite the measurable
marketing goals, Microsoft is still competing against the Lumia’s lack of brand awareness –
marking it as a difficult challenge that Microsoft will need to overcome in order to successfully
market the Lumia smartphone.
Company Overview
MissionStatement: At Microsoft, our mission is to enable people and businesses throughout the
world to realize their full potential. We consider our mission statement a commitment to our
customers. We deliver on that commitment by striving to create technology that is accessible to
everyone—of all ages and abilities. Microsoft is one of the industry leaders in accessibility
innovation and in building products that are safer and easier to use. [1]
Established in 1975 with headquarters in Redmond, Washington, Microsoft was once the leader
in the technology world. Microsoft solidified its top status with the success of the PC and
Microsoft Office software. However, in recent years, Microsoft’s popularity has been on the
decline due to stagnations in innovation. Suffering from marketing myopia, Microsoft failed to
participate in the upbringing of the smartphone, resulting in the loss of potential, loyal customers
to large smartphone companies such as Apple. Furthermore, Microsoft has been unable to
become the leader in other technological trends (i.e. mp3 players and tablets). These late entries
made Microsoft the consumer’s last choice, forcing the public to believe Microsoft was no
longer capable of modern technological advances.
Despite public opinion, Microsoft’s revenue has steadily increased over the past five years (Refer
to Appendix A). With trading areas in North America, Europe, South America, and Asia
(excluding China), they made $86.63 billion dollars for the 2014 fiscal year (Refer to Appendix
B and C for a revenue breakdown by segment and product line). With their current product
portfolio (Appendix D), Microsoft plans to sway public opinion by shifting to a “mobile-first,
cloud-first world”. During the 2014 fiscal year, Microsoft started this process through the
acquisition of Nokia’s devices and service business and Mojang, a Stockholm-based gaming
company that created the highly popular Minecraft franchise. [2] Buying Mojang and Nokia
meant acquiring the tangible aspects of the company and more importantly, their current client
base – especially Mojang. With Minecraft, Microsoft purchased its large digital traffic – an
element crucial to their current “mobile-first, cloud first” outlook.](https://image.slidesharecdn.com/8863c8e2-1c2e-415b-bb66-5f9c4b3357fb-150904231210-lva1-app6892/85/Final-Marketing-Plan-v2-1-3-320.jpg)
![4
Although Microsoft has potential for a profitable future, a huge risk for them is whether or not
any of these acquisitions will provide revenue. Their acquisition of Nokia for $7.2 billion dollars
and Mojang at $2.5 billion dollars [3] brings their grand total to $9.7 billion dollars. Though not
short on money, Microsoft is spending a good sum to stay relevant. Their main challenge is to
turn these acquisitions into profits. In order to gain the position they once had in technology,
they need a serious return on their investments.
Market Overview
Video Game Industry within the U.S.
Due to a large drawback of consumer spending in consequence of the great recession, the gaming
industry is slowly gaining back its power. However, at $40.9 billion dollars in the United States,
the gaming industry made below the estimated number of $42.9 billion dollars for 2014. Amidst
job losses and disposable incomes, consumers halted their video game purchases.
Despite the challenges of the economic recession, the gaming industry is expected to grow. As
the economy continues to recover – with more jobs being created – consumers feel comfortable
spending money on recreational activities. As an industry consistently growing through new
users, old users simply update their console to the latest generation. Gamers continue to play as
they age, which companies appreciate since it adds lifetime value.
With the recent launch of new generation consoles (the XBOX One, PS4, and Nintendo Wii U)
as well as the rise of mobile gaming platforms, the gaming industry is expected to grow at a
moderate rate of 3% over a five-year period. New generation consoles will rekindle interest in
traditional video gaming. The ever-growing gaming world will continue to add new users to an
existing market because of an increasing population along with a growing percentage of
Americans who play video games.
A large portion of new users joining the existing market is women. Women make up 48% of
gamers. This showcases potential growth for the gaming industry since a majority of games are
geared towards the male demographic. As technological advancements continue to roll out,
manufacturers are starting to focus on developing games using online services through consoles.
Since it is becoming easier for developers to create easy to play, low-cost games (mostly through
mobile), these will be specifically targeted for women, who have shown interest for games with
easy access. [4]
Trends
1) Mobile Gaming
The rise in Smartphones has allowed for independent game developers to create games
and place them into Apple’s App Store and Google Play for consumers to download. This
form of gaming broadens the target audience, allowing for people who do not own a
console to play games through a mobile device. Most mobile games are Free-to-Play
(F2P) or “freemium”, where the game itself is free but there are numerous incentives that
can be purchased to enhance gaming experience.
2) Games as a Service](https://image.slidesharecdn.com/8863c8e2-1c2e-415b-bb66-5f9c4b3357fb-150904231210-lva1-app6892/85/Final-Marketing-Plan-v2-1-4-320.jpg)
![5
Also known as cloud gaming, developers are starting to deliver their games digitally.
Doing so enables developers to continue updating their games with new software and
content. [5]
Competitive Analysis
Competitors/LOB Headquarters 2014
Gaming
Revenue
(USD)
Trading Area Product Mix Market
Share
Sony
Multinational
Conglomerate
Minato-Ku,
Japan
$9.5
Billion
U.S., Europe,
Asia Pacific,
China, Japan
Playstation
(PS), PS2,
PS3, PS4
8.4%
Nintendo
Consumer
Electronics
Kyoto, Japan $5.55
Billion
North and
South America,
Europe, Japan
Nintendo Wii,
Nintendo DS
5%
[6][7]
Sony Corporation
Sony continues to establish itself as a leader in the game console business with its Playstation
series. Despite competing head-on with Microsoft during the PS2 and XBOX 360 era, Sony has
won the latest generation battle. Critically acclaimed by both critics and consumers, the
Playstation 4 holds a large sales lead in front of the XBOX One with over 20 million sold
globally (with XBOX One at 10 million globally). [8] Sony’s success with the PS4 brought in
9.5 billion dollars for their gaming division, bringing their sales up 38.5%. [9]
Nintendo Co. Ltd
Once the leader of gaming consoles within America, loyalties shifted once Sony and Microsoft
released the PS2 and the XBOX 360, respectively. However, Nintendo found success again
when they debuted the Wii. Much simpler than the other two consoles, the Wii allowed for
Nintendo to broaden its video game audience. Its simplicity brought forth much success by
selling over 100 million consoles since its inception in 2006. However, the latest generation, the
Wii U, is unsuccessful. Released in 2012, the Wii U has only sold 9.2 million units. As a result,
Nintendo has struggled to make a profit - revealing a 91 million dollar operating loss. [10]
Latest Game Console Comparison
Product Price
(USD)
Primary
Geography
Subscription
Service
Online Game Play Streaming Apps
(i.e. Netflix)
XBOX
One
$349.99 U.S. XBOX Live Paid Access
through XBOX Live
Free Access
PS4 $399.99 U.S. Playstation
Plus
Paid Access
through PS+
Free Access
Wii U $299.99 U.S. None None Free Access](https://image.slidesharecdn.com/8863c8e2-1c2e-415b-bb66-5f9c4b3357fb-150904231210-lva1-app6892/85/Final-Marketing-Plan-v2-1-5-320.jpg)
![6
[11]
Smartphone Industry within the U.S.
Currently worth 71.8 billion dollars in the United States (the second largest Smartphone market
behind China), the Smartphone industry shipped 177.6 million phones to the U.S. in 2014 with a
75% market penetration. The Smartphone industry is expected to grow at a steady pace.
However, the pace will be slower than usual as it turns into a mature market. With the rise of
affordable phones through Google’s Android service, this expected outlook will take over the
market. Furthermore, the intense app competition contributes to the slowing of the Smartphone
industry growth. [12]
The popularity of Apple’s iPhone and Google’s Android service brought forth an industry within
the Smartphone business: apps. Through Apple’s App Store and Google Play, app developers
wanted to show consumers the endless possibilities of a Smartphone by introducing apps for
entertainment, news, and other functionalities. As a result, the influx of app developers caused
the app market to saturate, making it harder to please the consumer. Due to extreme competition
within the App world, competitors created apps for every possible need. Therefore, consumers
expect more than they are provided. This makes it nearly impossible for apps to differentiate
amongst themselves, let alone trying to make their app seem more superior than others. [13]
Trends
1) Bigger Screens
Consumers are starting to want a two-hands use of their smartphone, with the current
trend of phone screens being 4.5” or bigger. [14]
2) Mobile Payments
Paying for products in stores with a smartphone has caught traction within the
Smartphone community. Apple Pay, Alipay, and Google Wallet are examples of
apps that enable the use of a digital bar code to facilitate a purchase.
3) Wearable Technology
With the recent release of the Apple Watch, more companies are experimenting
wearables that require a smartphone in order to function properly.
4) New Location Technology
Stores are testing out new Apps that will know where the consumer is, pushing out
notifications regarding certain sales or coupons. These apps would create a
completely personalized, user-friendly shopping experience - going hand in hand with
the mobile payments trend.
5) Wireless Charging
Samsung and Intel are currently developing software to support cable-free charging.
Currently, the Google Nexus is the only smartphone that already possesses wireless
charging. [15][16]](https://image.slidesharecdn.com/8863c8e2-1c2e-415b-bb66-5f9c4b3357fb-150904231210-lva1-app6892/85/Final-Marketing-Plan-v2-1-6-320.jpg)
![7
Competitive Analysis
Competitor/LOB Headquarters 2014 Phone
Revenue (USD)
Trading Area Smartphone
Product Mix
Apple Inc.
Consumer
Electronics
Cupertino,
California
$74.47 Billion North America,
Europe, China,
Asia Pacific, Japan
iPhone series
Samsung
Multinational
Conglomerate
Seoul, South
Korea
$48.6 Billion North America,
Europe, China,
Asia Pacific, Japan
Galaxy Series
[17][18][19]
Apple Inc.
The leader in consumer electronics, Apple’s $124.2 billion dollar brand value makes it the most
powerful business in the world. Regardless of Samsung’s previous victories in the smartphone
battle, Apple came out the winner when the iPhone 6 and iPhone 6+ were released in late 2014.
Selling 74.5 million iPhone units in the latest quarter results, it brought revenue up 30%, broke
Apple’s sales record, and paved the way for Apple’s entry into wearable technology: the Apple
Watch. [20] The latest smartphone trend, the Apple Watch will increase sales for iPhone units
because the Apple Watch is an extension of the iPhone. The Apple Watch only functions when
connected to an iPhone. [21] Therefore, Apple’s success will continue thrive thanks to its intense
brand loyalty.
Samsung Group
Once the favored smartphone choice, Samsung’s previous revenue of $54.6 billion dollars
dropped more than 11%. Moving only 71 million units compared to Apple’s 74.5 in the latest
quarter, consumers chose to ignore Samsung’s latest smartphone – the Galaxy S5 – in favor of
the iPhone 6 series launch. [22] Once the iPhone provided the consumer a larger screen,
Samsung lost its main attraction. The high-end big screen title shifted from Samsung to Apple in
just a few months. Unfortunately for Samsung, the Apple Watch release will keep Apple’s grip
on the smartphone industry tight.
Latest Smartphone Comparison
Product Price Primary
Geography
Software U.S. Market
Share
iPhone 6 $199 U.S. iOS 41.6%
Lumia 540 $150 U.S. Windows 3%
Galaxy S5 $199 U.S. Android 29.7%
[23]](https://image.slidesharecdn.com/8863c8e2-1c2e-415b-bb66-5f9c4b3357fb-150904231210-lva1-app6892/85/Final-Marketing-Plan-v2-1-7-320.jpg)
![9
Market Strategy
Marketing Goal #1: For the first year on the market, Microsoft strives to reach 100% of its
current Lumia users, along with 50% of its potential target audience.
Achieved through the Lumia Software Update as well as other Promotional tactics
Marketing Goal #2: During the initial year on the market, Microsoft aims to successfully launch
the updated Lumia Smartphone in the United States to increase its current market share from 3%,
or 4.92 million phones, to 3.5%, or 5.7 million phones.
Leverage the XBOX console to market the Lumia Phone
Societal Marketing Goal: Microsoft will donate a portion of their revenue to The App Life, an
organization created by Microsoft that funds start-ups and beginner app developers.
Target Market
Competing in both the Smartphone and Video Game Industry, Microsoft broke down its target
audience using three segmentation strategies: demographic, geographic, and behavioral.
Demographic Millennial (18-34) Men and Women [24]
Geographic 14 States within the U.S. with heavy XBOX Presence [25]
Behavioral Millennials make up 39% of the Smartphone market, checking their phone an
average of 43 times a day. [24]
56% of American Households actively use an average of two gaming
consoles for cross-platform purposes. [26]
Population of (18-34) Millennials in the 14 States
California ~ 6,216,343
Alaska ~ 170,579
Arizona ~ 1,414, 672
Colorado ~ 1,159,762
Hawaii ~ 302,660
Minnesota ~ 1,163,194
Montana ~ 206,683
Nevada ~ 610,445
New Mexico ~ 447,080
North Dakota ~ 161,309
Texas ~ 5,901,333
Utah ~ 727,479
Washington ~ 1,510,825
Wyoming ~ 127,502
Total ~ 20,119,866](https://image.slidesharecdn.com/8863c8e2-1c2e-415b-bb66-5f9c4b3357fb-150904231210-lva1-app6892/85/Final-Marketing-Plan-v2-1-9-320.jpg)
![10
Population of Millennials within the 14 States ~20,119,866
Adding 1 million individuals to match 2015 ~21,119,866
Multiplied by 56% of households owning an
average of two gaming consoles
~ 11,827,125
Final Target Audience ~11,827,125
*See note in Appendix E [27]
Microsoft currently possesses a 3% smartphone market share within the U.S. With 164 million
smartphone users in America [28], there are currently 4.9 million Lumia’s. By increasing the
market share to 3.5%, or 5.7 million Lumia’s, there is a potential growth of 6 million Lumia
users within the 14 states. Taking all of this into consideration, Microsoft’s target audience are:
The Upgraders
The Upgrader is a millennial man or woman (18-34) who lives for interactive technological
experiences that are user-friendly and easily accessible. The Upgrader craves and expects
constant improvement because they were born into the fast pace world of technology - an era that
demands innovation and change. No matter how small the technological update, the Upgrader
gravitates towards it because of the constant need to progress. However, they do expect that the
updates belong to a product holding multi-purpose functions. These multi-purpose qualities
make their lives easier. The convenience of technology helps them feel closer to their
community and loved ones, whether it means playing Halo with online friends or speaking to
family using Skype. [29][30]](https://image.slidesharecdn.com/8863c8e2-1c2e-415b-bb66-5f9c4b3357fb-150904231210-lva1-app6892/85/Final-Marketing-Plan-v2-1-10-320.jpg)
Final Marketing Plan v2 (1)
- 1. 1 Alexia Louis Zekui (Jason) Lai Angela Nguyen Ziyang Song Chloe Gonzales-Gray Hao-Chih (Gaby) Shih BUS 302-06 4/28/2015
- 2. 2 Table of Contents I. Title Page……………………………………………………………………………..1 II. Table of Contents…………………………………………………………….....…….2 III. Executive Summary and Company Overview………………………………………..3 IV. Cont. of Company Overview and Market Overview for Video Games……………....4 V. Video Game Trends and Video Game Competitive Analysis………………………...5 VI. Market Overview for Smartphones and Smartphone Trends…………………………6 VII. Smartphone Competitive Analysis……………………………………………………7 VIII. SWOT/ Initial Implications/Statement of Opportunity……………………………….8 IX. Marketing Goals and Target Market………………………………………………….9 X. Cont. Target Market………………………………………………………………….10 XI. Marketing Mix, Product………………………………………………………….11-12 XII. Marketing Mix, Promotion…………………………………………………………..13 XIII. Marketing Mix, Price and Place and Societal Marketing……………………............14 XIV. Implementation Calender and Measurements and Control………………………….15 XV. Appendix…………………………………………………………………………16-18 XVI. Bibliography……………………………………………………………………...19-20
- 3. 3 Executive Summary Over the past few years, Microsoft’s position within the technology sector has slightly declined. Unfortunately, Microsoft’s smartphone division has suffered the most, holding just a 3% market share in the United States. Understanding its innovation obstacle, Microsoft will take advantage of the company’s current downturn in order to reach a larger target market. As a result, Microsoft is preparing to launch a new software feature for the Lumia smartphone. Breaking away from the limitations of being an ordinary smartphone, this change allows the Lumia to serve as both a remote control and game controller for the XBOX. Leveraging the XBOX to market the Lumia will bring forth the traffic it needs in order to achieve two marketing goals: a 3.5% increase in market share as well as reaching 100% of its current users and 50% of its potential consumers within the first year. Despite the measurable marketing goals, Microsoft is still competing against the Lumia’s lack of brand awareness – marking it as a difficult challenge that Microsoft will need to overcome in order to successfully market the Lumia smartphone. Company Overview MissionStatement: At Microsoft, our mission is to enable people and businesses throughout the world to realize their full potential. We consider our mission statement a commitment to our customers. We deliver on that commitment by striving to create technology that is accessible to everyone—of all ages and abilities. Microsoft is one of the industry leaders in accessibility innovation and in building products that are safer and easier to use. [1] Established in 1975 with headquarters in Redmond, Washington, Microsoft was once the leader in the technology world. Microsoft solidified its top status with the success of the PC and Microsoft Office software. However, in recent years, Microsoft’s popularity has been on the decline due to stagnations in innovation. Suffering from marketing myopia, Microsoft failed to participate in the upbringing of the smartphone, resulting in the loss of potential, loyal customers to large smartphone companies such as Apple. Furthermore, Microsoft has been unable to become the leader in other technological trends (i.e. mp3 players and tablets). These late entries made Microsoft the consumer’s last choice, forcing the public to believe Microsoft was no longer capable of modern technological advances. Despite public opinion, Microsoft’s revenue has steadily increased over the past five years (Refer to Appendix A). With trading areas in North America, Europe, South America, and Asia (excluding China), they made $86.63 billion dollars for the 2014 fiscal year (Refer to Appendix B and C for a revenue breakdown by segment and product line). With their current product portfolio (Appendix D), Microsoft plans to sway public opinion by shifting to a “mobile-first, cloud-first world”. During the 2014 fiscal year, Microsoft started this process through the acquisition of Nokia’s devices and service business and Mojang, a Stockholm-based gaming company that created the highly popular Minecraft franchise. [2] Buying Mojang and Nokia meant acquiring the tangible aspects of the company and more importantly, their current client base – especially Mojang. With Minecraft, Microsoft purchased its large digital traffic – an element crucial to their current “mobile-first, cloud first” outlook.
- 4. 4 Although Microsoft has potential for a profitable future, a huge risk for them is whether or not any of these acquisitions will provide revenue. Their acquisition of Nokia for $7.2 billion dollars and Mojang at $2.5 billion dollars [3] brings their grand total to $9.7 billion dollars. Though not short on money, Microsoft is spending a good sum to stay relevant. Their main challenge is to turn these acquisitions into profits. In order to gain the position they once had in technology, they need a serious return on their investments. Market Overview Video Game Industry within the U.S. Due to a large drawback of consumer spending in consequence of the great recession, the gaming industry is slowly gaining back its power. However, at $40.9 billion dollars in the United States, the gaming industry made below the estimated number of $42.9 billion dollars for 2014. Amidst job losses and disposable incomes, consumers halted their video game purchases. Despite the challenges of the economic recession, the gaming industry is expected to grow. As the economy continues to recover – with more jobs being created – consumers feel comfortable spending money on recreational activities. As an industry consistently growing through new users, old users simply update their console to the latest generation. Gamers continue to play as they age, which companies appreciate since it adds lifetime value. With the recent launch of new generation consoles (the XBOX One, PS4, and Nintendo Wii U) as well as the rise of mobile gaming platforms, the gaming industry is expected to grow at a moderate rate of 3% over a five-year period. New generation consoles will rekindle interest in traditional video gaming. The ever-growing gaming world will continue to add new users to an existing market because of an increasing population along with a growing percentage of Americans who play video games. A large portion of new users joining the existing market is women. Women make up 48% of gamers. This showcases potential growth for the gaming industry since a majority of games are geared towards the male demographic. As technological advancements continue to roll out, manufacturers are starting to focus on developing games using online services through consoles. Since it is becoming easier for developers to create easy to play, low-cost games (mostly through mobile), these will be specifically targeted for women, who have shown interest for games with easy access. [4] Trends 1) Mobile Gaming The rise in Smartphones has allowed for independent game developers to create games and place them into Apple’s App Store and Google Play for consumers to download. This form of gaming broadens the target audience, allowing for people who do not own a console to play games through a mobile device. Most mobile games are Free-to-Play (F2P) or “freemium”, where the game itself is free but there are numerous incentives that can be purchased to enhance gaming experience. 2) Games as a Service
- 5. 5 Also known as cloud gaming, developers are starting to deliver their games digitally. Doing so enables developers to continue updating their games with new software and content. [5] Competitive Analysis Competitors/LOB Headquarters 2014 Gaming Revenue (USD) Trading Area Product Mix Market Share Sony Multinational Conglomerate Minato-Ku, Japan $9.5 Billion U.S., Europe, Asia Pacific, China, Japan Playstation (PS), PS2, PS3, PS4 8.4% Nintendo Consumer Electronics Kyoto, Japan $5.55 Billion North and South America, Europe, Japan Nintendo Wii, Nintendo DS 5% [6][7] Sony Corporation Sony continues to establish itself as a leader in the game console business with its Playstation series. Despite competing head-on with Microsoft during the PS2 and XBOX 360 era, Sony has won the latest generation battle. Critically acclaimed by both critics and consumers, the Playstation 4 holds a large sales lead in front of the XBOX One with over 20 million sold globally (with XBOX One at 10 million globally). [8] Sony’s success with the PS4 brought in 9.5 billion dollars for their gaming division, bringing their sales up 38.5%. [9] Nintendo Co. Ltd Once the leader of gaming consoles within America, loyalties shifted once Sony and Microsoft released the PS2 and the XBOX 360, respectively. However, Nintendo found success again when they debuted the Wii. Much simpler than the other two consoles, the Wii allowed for Nintendo to broaden its video game audience. Its simplicity brought forth much success by selling over 100 million consoles since its inception in 2006. However, the latest generation, the Wii U, is unsuccessful. Released in 2012, the Wii U has only sold 9.2 million units. As a result, Nintendo has struggled to make a profit - revealing a 91 million dollar operating loss. [10] Latest Game Console Comparison Product Price (USD) Primary Geography Subscription Service Online Game Play Streaming Apps (i.e. Netflix) XBOX One $349.99 U.S. XBOX Live Paid Access through XBOX Live Free Access PS4 $399.99 U.S. Playstation Plus Paid Access through PS+ Free Access Wii U $299.99 U.S. None None Free Access
- 6. 6 [11] Smartphone Industry within the U.S. Currently worth 71.8 billion dollars in the United States (the second largest Smartphone market behind China), the Smartphone industry shipped 177.6 million phones to the U.S. in 2014 with a 75% market penetration. The Smartphone industry is expected to grow at a steady pace. However, the pace will be slower than usual as it turns into a mature market. With the rise of affordable phones through Google’s Android service, this expected outlook will take over the market. Furthermore, the intense app competition contributes to the slowing of the Smartphone industry growth. [12] The popularity of Apple’s iPhone and Google’s Android service brought forth an industry within the Smartphone business: apps. Through Apple’s App Store and Google Play, app developers wanted to show consumers the endless possibilities of a Smartphone by introducing apps for entertainment, news, and other functionalities. As a result, the influx of app developers caused the app market to saturate, making it harder to please the consumer. Due to extreme competition within the App world, competitors created apps for every possible need. Therefore, consumers expect more than they are provided. This makes it nearly impossible for apps to differentiate amongst themselves, let alone trying to make their app seem more superior than others. [13] Trends 1) Bigger Screens Consumers are starting to want a two-hands use of their smartphone, with the current trend of phone screens being 4.5” or bigger. [14] 2) Mobile Payments Paying for products in stores with a smartphone has caught traction within the Smartphone community. Apple Pay, Alipay, and Google Wallet are examples of apps that enable the use of a digital bar code to facilitate a purchase. 3) Wearable Technology With the recent release of the Apple Watch, more companies are experimenting wearables that require a smartphone in order to function properly. 4) New Location Technology Stores are testing out new Apps that will know where the consumer is, pushing out notifications regarding certain sales or coupons. These apps would create a completely personalized, user-friendly shopping experience - going hand in hand with the mobile payments trend. 5) Wireless Charging Samsung and Intel are currently developing software to support cable-free charging. Currently, the Google Nexus is the only smartphone that already possesses wireless charging. [15][16]
- 7. 7 Competitive Analysis Competitor/LOB Headquarters 2014 Phone Revenue (USD) Trading Area Smartphone Product Mix Apple Inc. Consumer Electronics Cupertino, California $74.47 Billion North America, Europe, China, Asia Pacific, Japan iPhone series Samsung Multinational Conglomerate Seoul, South Korea $48.6 Billion North America, Europe, China, Asia Pacific, Japan Galaxy Series [17][18][19] Apple Inc. The leader in consumer electronics, Apple’s $124.2 billion dollar brand value makes it the most powerful business in the world. Regardless of Samsung’s previous victories in the smartphone battle, Apple came out the winner when the iPhone 6 and iPhone 6+ were released in late 2014. Selling 74.5 million iPhone units in the latest quarter results, it brought revenue up 30%, broke Apple’s sales record, and paved the way for Apple’s entry into wearable technology: the Apple Watch. [20] The latest smartphone trend, the Apple Watch will increase sales for iPhone units because the Apple Watch is an extension of the iPhone. The Apple Watch only functions when connected to an iPhone. [21] Therefore, Apple’s success will continue thrive thanks to its intense brand loyalty. Samsung Group Once the favored smartphone choice, Samsung’s previous revenue of $54.6 billion dollars dropped more than 11%. Moving only 71 million units compared to Apple’s 74.5 in the latest quarter, consumers chose to ignore Samsung’s latest smartphone – the Galaxy S5 – in favor of the iPhone 6 series launch. [22] Once the iPhone provided the consumer a larger screen, Samsung lost its main attraction. The high-end big screen title shifted from Samsung to Apple in just a few months. Unfortunately for Samsung, the Apple Watch release will keep Apple’s grip on the smartphone industry tight. Latest Smartphone Comparison Product Price Primary Geography Software U.S. Market Share iPhone 6 $199 U.S. iOS 41.6% Lumia 540 $150 U.S. Windows 3% Galaxy S5 $199 U.S. Android 29.7% [23]
- 8. 8 Initial Strategic Implications Based on the company and market overview, Microsoft initially thought of pursuing a market development route. Since the Lumia’s inexpensive pricing fails to bring traffic into the U.S., Microsoft planned to take its smartphone product and bring it over to China, a country known for its frugal consumers. However, with the rise of Chinese phone manufacturer Xiaomi, Microsoft understood that the Chinese are loyal to in-country businesses. As a result, Microsoft will focus on the United States and head towards a product development route. Statement of Opportunity: Microsoft will create a new feature for the Lumia that provides it the capability to be used as both a controller and a remote for the Xbox. Instead of competing purely as a smartphone, Microsoft will utilize the Lumia in conjunction with the Xbox, which possesses customer loyalty and strong brand awareness. Therefore, it will increase awareness for the Lumia. By giving the Lumia the ability to be used as an Xbox accessory, it will garner sales from existing Xbox users that do not use the Lumia as well as potential new customers who find the product interesting. Strengths - Budget to run research - Brand Reputation - Large Product Portfolio - Intellectual Property - User-friendly software - Largest Software Company - Acquisition of Mojang - Acquisition of Skype - Weaknesses - Slow to innovate - Mobile Products - Internet Explorer - Bing - PC Market Maturing - Lack of Applications - Dependence on Windows Software - Windows 8 and above Opportunities - Mobile Device Industry - Mobile Advertising - Smart Machines - Cloud Based Services - Health Tracking System - Cyber Security - Music Sharing - Wearable Technology Threats - Intense Competition - Apple App Store and Google Play - Changing Consumer Behavior - Quick Technological Advances - Free Online Office Suite Programs - Mobile Devices = New PC’s - New devices don’t need Windows - Impending Lawsuits
- 9. 9 Market Strategy Marketing Goal #1: For the first year on the market, Microsoft strives to reach 100% of its current Lumia users, along with 50% of its potential target audience. Achieved through the Lumia Software Update as well as other Promotional tactics Marketing Goal #2: During the initial year on the market, Microsoft aims to successfully launch the updated Lumia Smartphone in the United States to increase its current market share from 3%, or 4.92 million phones, to 3.5%, or 5.7 million phones. Leverage the XBOX console to market the Lumia Phone Societal Marketing Goal: Microsoft will donate a portion of their revenue to The App Life, an organization created by Microsoft that funds start-ups and beginner app developers. Target Market Competing in both the Smartphone and Video Game Industry, Microsoft broke down its target audience using three segmentation strategies: demographic, geographic, and behavioral. Demographic Millennial (18-34) Men and Women [24] Geographic 14 States within the U.S. with heavy XBOX Presence [25] Behavioral Millennials make up 39% of the Smartphone market, checking their phone an average of 43 times a day. [24] 56% of American Households actively use an average of two gaming consoles for cross-platform purposes. [26] Population of (18-34) Millennials in the 14 States California ~ 6,216,343 Alaska ~ 170,579 Arizona ~ 1,414, 672 Colorado ~ 1,159,762 Hawaii ~ 302,660 Minnesota ~ 1,163,194 Montana ~ 206,683 Nevada ~ 610,445 New Mexico ~ 447,080 North Dakota ~ 161,309 Texas ~ 5,901,333 Utah ~ 727,479 Washington ~ 1,510,825 Wyoming ~ 127,502 Total ~ 20,119,866
- 10. 10 Population of Millennials within the 14 States ~20,119,866 Adding 1 million individuals to match 2015 ~21,119,866 Multiplied by 56% of households owning an average of two gaming consoles ~ 11,827,125 Final Target Audience ~11,827,125 *See note in Appendix E [27] Microsoft currently possesses a 3% smartphone market share within the U.S. With 164 million smartphone users in America [28], there are currently 4.9 million Lumia’s. By increasing the market share to 3.5%, or 5.7 million Lumia’s, there is a potential growth of 6 million Lumia users within the 14 states. Taking all of this into consideration, Microsoft’s target audience are: The Upgraders The Upgrader is a millennial man or woman (18-34) who lives for interactive technological experiences that are user-friendly and easily accessible. The Upgrader craves and expects constant improvement because they were born into the fast pace world of technology - an era that demands innovation and change. No matter how small the technological update, the Upgrader gravitates towards it because of the constant need to progress. However, they do expect that the updates belong to a product holding multi-purpose functions. These multi-purpose qualities make their lives easier. The convenience of technology helps them feel closer to their community and loved ones, whether it means playing Halo with online friends or speaking to family using Skype. [29][30]
- 12. 12 The new Lumia will possess a software feature that allows the user to transform their smartphone into a remote controller and an XBOX game controller. This feature includes: Connecting to the monitor via Bluetooth or WiFi. The phone will also be able to connect using an auxiliary cord. Once the controller application is opened, the user will be given the option to convert their Lumia into a remote controller or a game controller for the XBOX. Both settings will appear as a touch screen with standard buttons. In order for the touch buttons to function most efficiently, any zone not designated to a button becomes desensitized as long as the application is open. For the XBOX game controller option, there are two additional functions: The volume buttons on the side represent the R trigger buttons on a game controller (separating the volume buttons to top and bottom side of the phone). The right and left thumbsticks on a physical game controller have a designated touch zone on the smartphone that allows the individual to move their thumbs in the same motion as they would on an original game controller. The latest Lumia fulfills the Upgrader’s needs because it provides multi-functional qualities. Being able to turn their smartphone into a remote controller and game controller is an extended way of connecting with others. The accessibility of possessing this feature will allow more people to interact with the XBOX or the television device because a physical is not required. Despite products that also have the ability to turn a smartphone into a remote control, the Lumia will be the first to offer an XBOX game control feature.
- 13. 13 Promotion Direct Marketing Software Updates: For Microsoft’s current Lumia users, Microsoft will send out a software update letting their consumers know that a new function is available for their phone. The most important form of promotion, providing a software update for the older Lumia phones will provide word-of-mouth promotion to potential targets. Gaming Conventions: Comic Con in San Diego, PAX Prime in Seattle, and the California and Electronic Entertainment Expo (E3) in Los Angeles. A primary element that will receive much support, Microsoft will create a large splash within these conventions to excite their main consumer: gamers. With E3 being the first convention in June 2015, Microsoft will launch the Lumia product by renting a large exhibition space right next to the main stage to showcase its latest features through the XBOX. When consumers are waiting for the latest attendee to present on stage, they all gather near the stage to hold a good spot. As a result, Microsoft will guarantee traffic. After E3, Microsoft will attend both Comic Con and PAX Prime (as well as other smaller conventions) to hold exhibitions as well. Doing so will conduct ongoing business. Pop-up ads: When consumers are about to play/end a video game or watch/stop a program using the XBOX, a pop-up ad will appear on their monitor screen with the Lumia phone along with a caption saying “Now compatible with XBOX Games and Consoles! Press continue to learn more!” A primary element meant to support ongoing business, this form of advertising will allow Microsoft to get its message across through inexpensive means. Direct Marketing and Sales Promotion Ongoing business support, Microsoft will provide coupons inside XBOX video games as well as new XBOX game consoles. These coupons will provide the consumer a discount for their next Lumia phone purchase. A primary element within the promotional mix, Microsoft wants to provide discounts in order to entice the consumer into buying the product. Sales Promotion Going along with our pricing strategy, Microsoft will offer two bundle promotions: Receive a free XBOX game with the purchase of a Lumia phone or receive a discount on the next purchase of an XBOX One console with the purchase of a Lumia phone. Another primary element, the bundles will be at their lowest during the holidays. Online Marketing Justine Ezarik, a leader in the gaming review industry, will be offered the new Lumia phone along with the XBOX One to promote the new Lumia XBOX feature through her social media accounts. A secondary element, Microsoft cannot assume that she will accept the proposal.
- 14. 14 Price Microsoft will halt the current market penetration strategy for two reasons. Firstly, Microsoft Lumia is priced cheaper than their major competition: iPhones and Androids. Further cutting the price of the Lumia may cause Microsoft to sell the Lumia’s at break-even point. Secondly, market penetration pricing will not allow Microsoft to convert enough individuals. Americans already buy the expensive Apple iPhone. Thus, Microsoft needs to focus its efforts on bundle- pricing – enticing their consumer with more than just a smartphone. New Pricing Objective: Quickly acquire market share once the new Lumia has been released into the competitive United States market New Pricing Strategy: Pursue a bundle pricing strategy to attract immediate brand awareness First Bundle Pricing Strategy Bundle Lumia with popular XBOX exclusive game (i.e. Halo, Fable Series) Games current price: $60 | Lumia’s current price: $90-$200 Starting bundle price: $120 a bundle for the first 10,000 bundles Raised to $150 a bundle after initial sales Second Bundle Pricing Strategy Bundle Lumia with XBOX One console Console Current price: $349 Starting bundle price: $320-$400 | Raised to $390-$500 with Kinect Accessory Prices for both bundles will be lowered to promotional sale prices for the holidays. Societal Marketing: All the sales from the bundling strategy will be donated to The App Life. Microsoft supporting and funding beginner start-ups and app developers could influence them to create apps for Microsoft, which in turn will generate more market share and revenue. Place Using selective distribution, Microsoft will first manufacture their Lumia phones in China to keep their pricing low. The graph demonstrates the multi-channel distribution system Microsoft will use to distribute their product. However, for the purposes of this marketing plan, Microsoft will focus on the indirect channel of Microsoft retail stores. Microsoft will focus on this route to provide consumers the ability to experience a real-life demonstration of the new Lumia product.
- 15. 15 Implementation Calendar Year One: Focus on marketing the Lumia through XBOX elements Phase One - Research of Smartphone and Gaming Industry - Afterwards, put together Marketing Plan - Present to CEO, Satya Nadella Phase Two - Software Engineers develop new Lumia software - Developers create new Lumia prototype - Announce new feature to shareholders and consumers Phase Three - Showcase new Lumia at E3 convention in June - Present at Comic-Con in July and PAX Seattle in August - Pre-Orders available during the convention time frame Phase Four - Execute other Promotional Elements - Officially launch in September to Microsoft.com and retail stores - Implement Measurement Methods Year two: Negotiate with Sony and Nintendo to make the Lumia compatible with their game consoles Measurement and Control - Microsoft will monitor its unit sales for the Lumia, compared to the entire Smartphone industry, in order to see if we have reached a 3.5% market share within a year of its release. - Microsoft will track the number of XBOX users that use the Lumia as a controller during the first year through its internal data system to see if we have reached 50% of our target audience. - Microsoft will also conduct customer research by pushing out a survey via the XBOX Pop-up feature to see if we have reached 50% of our target audience.
- 16. 16 Appendix A
- 17. 17 Appendix B Appendix C Commercial Licensing Sector Devices and Consumer Computing and Gaming Hardware Commercial (Other) Devices and Consumer (Other) Phone Hardware Corporate and Other Server Products Windows Xbox Gaming and Entertainment Consoles and Accessories Enterprise Services Resale Lumia Phone Windows Embedded Non-Volume Licensing of Microsoft Office Second and Third-Party Video Game Royalties Commercial Cloud (Office 365 + other commercial products/online services) Search Advertising Microsoft Office for Business Office Product Set for Consumers Xbox Live Subscriptions Display Advertising Windows Operating Set for Consumer Surface Device and Accessories Office 365 Personal)
- 18. 18 Appendix D Microsoft Windows Microsoft Office Microsoft Surface Microsoft Lumia Xbox Skype MSN Bing Product Operating Systems Office Suite Tablet Mobile Device Gaming Console Communication Software Internet Service Search Engine Original Release/Acquisition November 1985 August 1990 October 2012 September 2013 November 2011 May 2011 March 1995 June 2009 Latest Release October 2013 February 2013 June 2014 November 2014 November 2013 N/A N/A N/A Pricing $69.99 - $119.99 $69.99 - $399.99 $299.99 - $699.99 $99.00 - $199.00 $349.99 – $499.99 $2.99 - $13.99 $9.95 N/A Appendix E *Note: Numbers were found through the U.S. Census of 2010 and rounded to the nearest thousands place. Microsoft added 1 million to the equation because from 2010-2015, the population grew by 11 million people. Dividing 11 million amongst 5 years brought about 2.2 million people per year. Furthermore, California and Texas hold the most people. They happen to be within the targeted geography for this marketing plan.
- 19. 19 Bibliography 1. Microsoft. "Microsoft Accessibility." Mission, Strategy, and Progress. Microsoft, n.d. Web. 11 Feb. 2015. 2. Rig, Bill. "Microsoft Needs Minecraft to Boost Mobile Ambitions." Reuters. Thomson Reuters, 12 Sept. 2014. Web. 21 Feb. 2015. 3. Kovach, Steve. "Microsoft Closes Its $7.2 Billion Purchase Of Nokia." Business Insider. Business Insider, Inc, 25 Apr. 2014. Web. 21 Feb. 2015. 4. Alvarez, Andrew. Video Games in the US. Rep. N.p.: n.p., n.d. IBISWorld. Web. 18 Apr. 2015. 5. Harris, Todd. "Top 5 Online Gaming Industry Trends for 2015 - Internap."Internap. Internap, 01 Dec. 2014. Web. 26 Apr. 2015. 6. "Sony Company Overview." OneSource. Avention Inc., 31 Mar. 2014. Web. 18 Apr. 2014. 7. "Nintendo Company Overview." OneSource. Avention Inc., 31 Mar. 2014. Web. 18 Apr. 2014. 8. Welch, Chris. "Sony Says It's Sold over 20 Million PlayStation 4 Consoles." The Verge. Vox Media, 03 Mar. 2015. Web. 26 Apr. 2015. 9. Griffiths, Daniel N. "Sony FY 2014 Earnings: Winning The Console Battle, Losing The Profits War?" Forbes. Forbes Magazine, 14 May 2014. Web. 18 Apr. 2015. 10. Gera, Emily. "Nintendo Has Sold Just 9.2 Million Wii U Units since Its 2012 Launch." Polygon. Vox Media, 28 Jan. 2015. Web. 18 Apr. 2015. 11. "PS4 vs. Xbox One vs. Wii U Comparison Chart - Xbox One Wiki Guide - IGN." IGN. Ziff Davis, 24 Nov. 2014. Web. 18 Apr. 2015. 12. "Worldwide Smartphone Growth Forecast to Slow from a Boil to a Simmer as Prices Drop and Markets Mature, According to IDC." Www.idc.com. IDC Corporate, 1 Dec. 2014. Web. 26 Apr. 2015. 13. Kahn, Sarah. Smartphone App Developers in the US. Rep. N.p.: n.p., n.d. IBISWorld. Web. 18 Apr. 2015. 14. Alex. "A Comprehensive Look at Smartphone Screen Size Statistics and Trends." Medium. Medium, 28 May 2014. Web. 25 Apr. 2015. 15. Boxall, Andy. "From Health to Home, Your Phone Will Keep Tabs on Everything in 2015." Digital Trends. Digital Trends, 28 Dec. 2014. Web. 25 Apr. 2015. 16. Parsons, Jeff. "Ready for #MWC15? These Are the Top Tech Trends We're Expecting This Year." The Daily Mirror. The Daily Mirror, 27 Feb. 2015. Web. 26 Apr. 2015. 17. "Apple Company Overview." OneSource. Avention Inc., 31 Mar. 2014. Web. 18 Apr. 2014. 18. "Samsung Company Overview." OneSource. Avention Inc., 31 Mar. 2014. Web. 18 Apr. 2014. 19. Mick, Jason. "DailyTech - Samsung Stutters; Profits Fall 36%, Loses Global Smartphone Sales Lead to Apple." DailyTech - Samsung Stutters. DailyTech, 30 Jan. 2015. Web. 26 Apr. 2015. 20. Apple. "Apple - Press Info - Apple Reports Record First Quarter Results." Apple Reports Record First Quarter Results. Apple Inc., 27 Jan. 2015. Web. 26 Apr. 2015. 21. Paczkowski, John. "The Apple Watch Isn't A Watch, It's An IPhone Sales Engine." BuzzFeed. Buzzfeed, 9 Mar. 2015. Web. 26 Apr. 2015. 22. Edwards, Jim. "These Two Phones Prove Apple Has Forced Samsung to Change Its Game." Slate. Slate, n.d. Web. 26 Apr. 2015. 23. "ComScore Reports December 2014 U.S. Smartphone Subscriber Market Share." ComScore, Inc. ComScore, Inc, 9 Feb. 2015. Web. 26 Apr. 2015. 24. Tassi, Paul. "The Electoral Map Of PS4 vs. Xbox One Console Popularity." Forbes. Forbes Magazine, 6 Mar. 2014. Web. 18 Apr. 2015.
- 20. 20 25. Fox, Zoe. "Forget Generation Y: 18- to 34-Year-Olds Are Now 'Generation C'" Mashable. Mashable, 23 Feb. 2012. Web. 18 Apr. 2015. 26. "Newswire ." Newswire. Nielsen, 9 Mar. 2012. Web. 18 Apr. 2015. 27. "United States Census Bureau." Population Estimates. United States Census Bureau, n.d. Web. 18 Apr. 2015. 28. "Smartphone Users in the U.S. 2010-2018 | Forecast." Statista. Statista, 2015. Web. 26 Apr. 2015. 29. Nielsen. "Newswire ." Millennials: Technology = Social Connection. Nielsen, 26 Feb. 2014. Web. 26 Apr. 2015. 30. Wobbrock, Jake. "How Millennials Require Us to Design the Technologies of Tomorrow | WIRED." Wired.com. Conde Nast Digital, n.d. Web. 25 Apr. 2015.