Marketing Project from MBA Class- Sony Vaio Laptops.

1. Marketing Strategy: Sony Vaio Laptops
Dhananjay Sawant
Kaushik Thosani
Marcela Esteves
Shirly Aran
Vikram K.
Yael Granot

2. Introduction
Sony Corporation
 Sony creates consumer electronics and content/entertainment.
 Leader in product innovation in the 20th century / analog lifestyle (e.g., Walkman, Playstation).
 Consumer lifestyle migrated from analog to digital.
 Sony lost its reputation for hit products (e.g., Xbox gaming console, Canon digital
cameras, Samsung TVs, and Flip camcorders).
 Challenge: Sony’s products are not connected to each other or to the company's
music, movies, and TV shows.

3. Introduction
Sony Corporation
 “make.believe” brand communication:
Single message (electronics, games, music, mobile phones, network services).
Sony “transfuses imagination into reality”.
Products + technology + content + network services = unparalleled user experiences
Sony’s future: from manufacturer to a “software company”
 Drive hardware value through software
“Sony User Experience”
 Sony Online Service: integrate network service, hardware product, user-driven content

4. Introduction
Sony Vaio Laptops
 Value proposition: sleek design + high quality technology.
 Vaio sales:
 2008: Significant decline in revenue of Vaio Laptops sales (economic downturn).
 2009: Vaio sales rose 12% to 5.8 million units (global)
 Laptop market expanded despite recession due to introduction of Netbooks.
 2010: First quarter report indicates lower revenue (10.2% sales drop in total networked
products and services revenue). Target: 10 million units.

5. Introduction
Sony Vaio Laptops
 Bring to market more powerful solutions;
 Improve user efficiency;
 Change peoples lifestyles.
Vaio is sold at a premium price in all market segments it competes in

6. Problem Identification
 Sony Vaio is sold for a premium price, but the value is not perceived by the customer.
 Other vendors offer similar specs and reliability for a lower price & design options. E.g Dell v13.
Dell Vastro v13
 “…there has been a paradigm shift in the marketplace that has rendered Sony products to be
seconded guessed in terms of its competitiveness by consumers.”
---- Mike Abary, VP Sony Information Technology Products division.

7. Price Comparison
Specification SONY DELL TOSHIBA HP APPLE % Premium
Memory -- 1 GB
CPU -- Atom 1.66 Ghz 449 299 349 329 999 38.15
Screen Size -- 10.1''
Memory -- 2 GB
CPU -- Dual Core 1.3 Ghz 809 599 na 499 1199 47.35
Screen Size -- 14''
Memory -- 3 GB
CPU -- 2.4 Ghz 699 549 734 549 1799 14.59
Screen Size -- 15.6''
Memory -- 4 GB
CPU -- Core2duo 2.2 Ghz 999 659 799 849 2299 29.9
Screen Size -- 16-17''
Avg. Premium 32.49

8. Situation Analysis
Company
 Premium features + design
Focus on home, travelling, gaming, small business.
Half of the series compete in premium market.
 Vaio netbook = differentiated offerings (family, ultraportable)
Collaborators
 Retailers: primary distribution channel
 Intel, nvidia (graphics card)
 Microsoft – Windows
 Designers (“Sony Signature”)

9. Situation Analysis
Customers
 Expects a lower laptop price (recession).
 Personal usage trend: home, mobility.
 Overwhelmed by mobile devices: smart phones, iPads, netbooks.
 Less differentiation of vendors based on technical specs.
 Desires an high quality user experience. (software experience)
 Desires a differentiated design.
Competitors

10. Situation Analysis
Competitors (continued)
 PC ASP = $569 vs. Mac ASP: $1,400.
 Apple holds 90% of premium market (>$1k)
 Apple lowered prices to address recession
 Sales decrease (~6 months) in 2009, but it has rebounded.
 Weak professional market affected PC vendors only.
 Apple’s strengths not matched by PCs
Context
 Laptop PC retail revenue (07/08): $330B in 2007
 Forecasted US PC unit sales for 2010: 44M laptops vs. 25M desktops
 Approximately ~17% of laptop market is taken by netbooks.
 Emerging markets = 70% of next billion computers (desktop, laptop).

11. Situation Analysis
Context (continued)
 Netbook PCs – lead to decreased margins
 Lower price (~$350) forced laptop vendors into “price cuts” and profit loss.
 Revenue from netbooks can’t offset drop in revenue from laptop sales.
 May be replaced by new powerful, ultrathin laptops or by tablet PCs.
 Cloud Computing (HVD) – require new business model
 Approximately 25% of global PC market by 2014.
 Professional market will demand less expensive computers, with lower replacement
 Major impact on PC business model.
 Tablet PCs – market in definition phase
 Apple’s iPad had huge sales success
 Competes directly with netbooks.

12. SWOT Analysis
Strengths
 Brand is perceived as “cool” PC.
 Product design stands out.
 Technical quality is competitive.
 Target on mobile computing.
 Premium price strategy maintains margin.
Weakness
 Value proposition is not recognized.
 Brand is less known in the US markets.
 Lack/limited of integration with other Sony devices.
Product line is not well defined.
 Free trial applications clutter.

13. SWOT Analysis
Threats
 Laptop market = commodity market.
 Design competition from other vendors.
 New competitors in netbook/ultra thin segment.
 Customer pricing expectations.
 No control over OS quality (e..g, Vista fiasco).
Opportunities
 Unique user experience in PC market.
 Leverage Sony content.
 Out-of-box software focused on content.
 Expansion of mobile computing.
 Growth in home, youth market segments.

14. Conclusion
Survey Results
Cloud computing
•Sony will try to differentiate its service from iTunes. One example: Users will be able to upload videos
shot on camcorders, save photos taken with digital cameras, and post other digital content to their
personal online accounts. That's how Google's suite of Net-based services (such as YouTube video-
sharing and Picasa photo site) works. At some point down the road, Sony would consider letting
independent software developers create applications for the service, much the way Apple does for its
iPhone. "The new online service will be one key factor as we introduce new types of mobile products,“
 Therefore develop software similar to iLife.
•In an AP interview, Sony executive VP Kaz Hirai declared the upcoming Sony Online Service, which
adds PSN-like features (possibly including game, music and movie downloads) to a wide variety of
Sony devices, a major selling point. "That's the kind of combination that I think is not seen anywhere
else," Hirai said. "That I think is where our core competence lies, and that's a differentiator for Sony.
more likely to continue purchasing media on that same account and buy more Sony devices to get
additional use out of it
•Dis for Sony content on Vaio only: spread efforts. Maybe auto register into existing PSP Network?
•Keep premium price policy to maintain margin and add value, since 30% will be on low cost. Ddon’t
go into price war + add value on software.
•Negotiate with distribution channel.

15. Survey Analysis
• Around 19% unaware of Sony Vaio brand / Sony makes laptops
• Repeat Buying – current Sony Vaio customers prefer Mac
• Repeat Buying – Dell/HP/IBM users more inclined towards Mac rather than Sony
Vaio
• Sony perceived as better brand but loses to Mac
• Specifications as Value – Sony lags even behind Mac, Dell & HP ahead – Lack of
options in specifications
• Finalizing Buying Decision – Majorly Self Research and Expert Opinion
• Approximately 50% prefer ‘High Quality Brand with 15% price premium’
• Ready to pay $100 price premium – Specifications becomes an issue
• Around 60% of the buyers would buy Sony Vaio laptops if Customized Professional
Software is provided
• Other Brands of Sony – Popular – Opportunity for Cross Promotion

16. Kano Analysis
Delighted Performance
Low High
Quality Quality
Disgusted

17. Perceptual Map
High Price
Low High
Quality Quality
Low Price

18. Alternatives
1. Lower Price
 Lower price and compete below premium market:
 Discontinue premium market series.
 Add more alternatives in regular market.
 Clearly define laptop series for small business and private market segments.
 Advantages:
 Price point becomes more competitive.
 Less internal cost to add value to Sony Vaio laptops.
 Disadvantages:
 Doesn’t address market opportunity.
 Sony’s positioning becomes similar to other PC vendors.
 Reduced margins.
Switch in brand positioning can alienate current customers.

19. Alternatives
2. Add Value
 Add value to Sony Vaio, maintain price point:
 Add value, e.g., through software, customer service, content.
 Added value justifies premium price.
 Clearly define laptop series for small business and private market segments.
 Advantages:
 Respond to market opportunity
 Differentiate Sony Vaio laptops from other PC vendors.
 Maintain higher margins.
 Maintain brand positioning as higher end PC.
 Disadvantages:
 Requires higher internal effort to add value.
 Requires faster integration with other Sony products.
 Higher risk: must deliver on the promise that a PC can delight.

20. Alternatives
3. Add Value, Reduce Price, Collaborate
 Add value, reduce premium price, share premium with distribution channels:
 Add value: same strategy as alternative 2.
 Sell Vaio for a lower premium price.
 Provide incentives to distribution channels .
Advantages:
 Respond to customer expectation of lower laptop prices.
 Keep brand positioning
 Gain support of purchase influencer in critical timing for Sony Vaio brand.
Disadvantages:
 Lower margins.
 Difficult to remove incentive in the future.

21. Recommendation
Add Value, Reduce Price, Collaborate
 Support complete customer experience across Sony Vaio lifecycle.
 Become the first PC to delight. Move from PC manufacturer to experience enabler.
 Product
 Improve current Sony Vaio software (music, photo, movie, cd burning, home server).
 Provide easy, preferred access to content (music, photo, movies, Tv shows, e-books).
 Enhance customer service quality through in-person support with warranty.
 Place: incentives to retailers to promote Sony Vaio quality (e.g., quotes, bonus per unit).
 Promotion: leverage Sony content, online presence, integration with Sony hardware.
 Price: maintain premium price in all market segments, but make the premium lower.

22. Recommendation
Short Term – Create Value
Improve and re-launch Sony Vaio software.
 Remove “free-trial” applications clutter.
 Option to auto-register Vaio into PSP network for content access.
 Preferred access to Sony content (e.g., prior to DVD/cd release).
 Provide incentives to retailers to promote Vaio’s quality.
 Establish partnership with retailers for Sony “Genius Bar” experience.
 Focus product line on specific market segments (e.g., home, business, mobile, gaming).
 Clearly address: home server, youth/student, small business, mobile computing
 Keep netbook differentiator.
 Research tablet computing market.

23. Recommendations
Long Term – Expand Value
 Integration with other Sony devices.
 Provide direct access to Sony Online Store.
 Invest and expand business in emerging markets.