Sony Ericsson is one of the best companies in manufacturing and selling mobile phones. Despite some set back recently, the company is planning to get back into position by correcting the problems and implementing a new strategy. Company management considers that the best times for improving and stabilizing its profit in business are during Christmas 2009 and New Year 2010. The plan here is to analyze the current situation of market and different competitors’ positions in the market. This also includes analyzing the present consumer’s trend which is one of the most imperative aspects in business one needs to espouse. After this, SWOT analysis is carried out. SWOT analysis includes identifying the strength, weaknesses, opportunities and threats that may affect Sony Ericsson’s performance.
An objective for marketing is put only based on SWOT, internal and external analysis. Selection of target groups of people will be decided after this. Only after this, an elite decision will be made on describing which product will be provided to each segment of group. An important section of this report is marketing mix section in which everything regarding price, place, promotion and product are explained to attract consumers to buy Sony Ericsson’s products. Last part of this report includes implementation; control and budget in which how the adopted plan will be implemented and controlled are discussed and final segment outlines budget.
This segment includes explanation of internal and external analysis of Sony Ericsson.
This section includes a short explanation of current situation of Sony Ericsson, different types of Sony Ericsson products and its performance in the market.
Profile of Sony Ericsson
“Sony Ericsson, a 50:50 joint venture of Sony Corporation and Telefonaktiebolaget LM Ericsson, was established in October 2001.” (Mission: welcome to Sony Ericsson mobile communications 2009).
Sony Ericsson’s headquarters is located in London. “Sony Corporation is a Japanese consumer electronics company, which is one of the world’s most popular brands. On the other hand, Ericsson is a Swedish telecommunications company.” (Telford 2009). When both these companies joined hands together, both of them stopped developing their own mobile phones.
From 1930s roots of Ericsson were present. But it became a key player only in mid-1990s as emergence of mobile telephone took off. Within a few years Ericsson turned out to be a world leader by holding “17 % share of sales.” (Nilsson n.d.).
In 1993, company sold only 800,000 phones. But by 1997, this figure reached 32 million. Year 1998 was not fine for Ericsson as stronger competitor Nokia took a good position in the market. Year 1998 added more problems to Ericsson when it experienced some technical complaints to its phone. For next three years, company faced lots of problems with unexpected events, lack of a backup system and skilled laborers. Company incurred serious financial loss during these years. It was on April 24, 2001 Ericsson was merged with Sony, one of the giants in the field of electronics in Japan. After partnering, Sony contributed more to design and consumer sales. After merging, company started its operation with nearly 4,000 employees.
Being a leading provider of technology and services to various telecom operators, Ericsson supplies their services to more than 250 million subscribers.
“Ericsson is advancing its vision of ‘communication for all’ through innovation, technology, and sustainable business solutions.” (Press release: increase in the total number of shares in Telefonaktiebolaget LM Ericsson 2009).
Sony Ericsson’s workforce includes nearly 70,000 persons working in 175 countries generating revenue of USD 27 billion in 2008.
Sony Ericsson products
Products from Sony Ericsson have always universal appeal and “are different in the key areas of imaging, music, design and applications.” (Profile: corporate structure 2009).
Products launched from Sony Ericsson are making best use of 2G and 3G platforms which are major mobile communication technologies. Products from Sony Ericsson are mainly mobile phones which mostly concentrate on categories such as music, camera, business that facilitate web and email features, etc. All the products are available in different series such as C series, D series, and F series and so on. The products available in each series have got different types of features. The five largest categories of Sony Ericsson products are described below.
The Walkman branded phones, launched in 2005. This is one of the first music mobile phones. After this innovation whole market is prompted to making of portable music on mobile. The surprising feature of this is silver W button. With a single click media center of the phone will get open.
Cyber-shot branded phones, launched in 2006. Phone under this series mainly focuses on camera facilities. This type of phone always includes flash, zenon flash and also autofocus. Sony Ericsson C905 is the latest phone under this brand.
Bravia-branded mobile phones, launched in 2007. The feature of these branded mobile phones is one can watch terrestrial television on this phone. UIQ branded range of mobile phones facilitates touch screen facility. This product features QWERTY keypads and the platform used is symbian OS.
Xperia is another range of products from Sony Ericsson which induced Windows Mobile Operating System into the mobile.
Big success among these entire products is cyber-shot. This has become one of the popular brands. One of the reasons behind this is it has got decent camera and media viewing facilities. On 28 May 2009, Sony Ericsson unveiled its latest product under this category featuring first 12-megapixel camera in mobile phones.
Sony Ericsson performance
Increased competition in the market with other companies and the recent global economic recession had a major impact on Sony Ericsson’s recent performance. Five consecutive quarterly losses are posted by the company. Reason for this is its lack of concentration in consumer demanded handsets and it concentrated only on cyber shot and walkman line ups. Last quarter it was a loss of about $244 million for Sony Ericsson. Sony Ericsson’s sole president Nordberg hoped that company’s novel lineup of devices and by adopting some other measures like cost-cutting measures will help company to get back on right track.
Recently, the company made 3G/HSPA single-chip smartphone platform. Also, company made relations with Dell and Hojy which are key players in the market. Increased effectiveness in supply chain and cost reduction has bought some positive trends in the third quarter. In September Sony Ericsson “announced the world’s smallest solution for connectivity on mobile handsets: the CG2900, the world’s first 45 nm single-chip solution for Bluetooth, FM and GPS.” (Press release: ST-Ericsson reports third quarter 2009 financial results 2009).
Company has made strong lineups in devices which are featuring multimedia and other capabilities. Satio, Aino etc are examples that are placed in the market to compete with devices like iPhones. Company also made a major shift in platform strategy by using symbian and windows mobile.
“The company recorded revenues of E11, 244 million ($16,543.7 million) during the financial year ended December 2008 (FY2008), a decrease of 12.9% over 2007.” (Sony Ericsson mobile communications AB – SWOT analysis 2009).
Operating loss of the company in FY2008 was E113 million ($166.3 million) while comparing with the profit of E1, 544 million ($2,270.3 million) in 2007. Net loss for the company in FY2008 was E73 million ($107.4 million) while comparing to profit of E1, 114 million ($1, 639.1 million) in 2001.
The rules and regulations of the government have influenced Sony Ericsson’s business in UK market. The government rules and regulations include taxes, funding and the policies regarding the payment etc affect the performance of Sony Ericsson’s s business both positively and negatively in UK market. If government takes certain actions to expose the unlocked market in US, there will be large increase in the number of customers and its business profit will also increase.
The role of economic situation is an important factor in the market. Due to the financial crisis there are lot of problems including unemployment. But “Sony Ericsson confirms that it is continuing its business transformation program, as announced previously, and is making changes to its global organization to reduce costs and increase efficiencies.” (Sony Ericsson to close Chennai unit 2009).
Thus, the profit of the company also increases. But easing of financial crisis is a good sign for its business development. For the success of every business more care is given to the government’s economic policies.
The effect of socio-culture plays an important role in business. The needs of human beings change rapidly. The needs mainly depend on their customs. Therefore, changes may have to be introduced in the design of mobile phones according to the demand of the customers. “Sociological factors such as costs structure, customs and conventions, cultural heritage, view toward wealth and income and scientific methods, respect for seniority, mobility of labor etc. have far-reaching impact on the business.” (The economic factors affecting business environment 2009).
Technology plays a key role in the sales and marketing of the Sony Ericsson’s products in UK market. It utilizes various digital and analog technologies to give maximum support to the customers. The technologies include TDMA, CDMA, WCDMA, PCS etc. The sale of smartphones in UK market reveals its importance in the business technical support. The research and development department of Sony Ericsson gives importance to introducing new technologies, which are really helpful for the customers to meet their requirements and thus it leads to making its own position in the global market.
Consumer behavior analysis
The buyers of Sony Ericsson are more affluent persons and they are ready to pay more, for getting a handset which has all modern facilities in it. The existing customers expect more from the company than the new customers. But now in the current scenario, the company is facing loss because the customers demand new handsets that are introduced by its competitors. Christmas time is the best time when the sale of handsets increases tremendously.
Sony Ericsson is not the only company in the market. Many companies are competing with Sony Ericsson. The demand of the customers is mainly based on individual’s financial background. In order to make a position in the global market it is important to develop additional technology in its products competitively. The main competitors of Sony Ericsson are “Motorola, Inc, Nokia Corporations, and Samsung Electronics Co., Ltd.” (Sony Ericsson mobile communications AB, London United Kingdom 2009).
In the global consumer market, the services of Motorola, Inc has got important position because of its consumer services. The impact of their services on the consumer market made them the best competitor of other mobile companies. They implement various wireless technologies in their products. Similar to Sony Ericsson they also give preference to the requirements of the customers. They provide various technologies, products for global communication purposes. The main specialty of the company is that they offer high-quality products at lower costs.
The second main competitor of Sony Ericsson is Nokia Corporation. They also give importance to wireless telecommunication. To attain their own position in the global market, they are implementing various provisions for the usage of multi-media services, data transferring etc.
Samsung Electronics Co, Ltd
Samsung Electronics Co, Ltd. is considered as one of the main competitors of Sony Ericsson. They are also providing world-class service to the customers.
“Roam around the world freely with new advanced DUO. DUO quad-band Support and combination of CDMA and GSM technology facilitates roaming in maximum countries around the world.” (About Samsung Electronics Co., Ltd. 2009). All these facilities made them one of the competitors of Sony Ericsson Company.
Today, technology is growing very rapidly and according to the changing technology, the need of the customer is increasing. In the fast life of the people, mobile phone is essential for them and most of the people are ready to spend high cost for owning it. Sony Ericsson is implementing various types of mobile phones with different and latest functionality with attractive design. According to the consumer’s trends this company is introducing its modern products in the market. Nowadays people are buying mobile phones not only for communication but they also prefer various other functions like internet service, Bluetooth, infrared, multimedia, and radio and so on. “In 2005, Sony Ericsson once again started a mobile phone trend with the introduction of several Walkman®-branded music phones. The W800 was the first in the industry to offer a quality digital music experience and a high-performance 2-megapixel auto-focus camera, combined with a full-feature mobile phone.” (Sony Ericsson – our link to the consumer n.d.).
All these benefits in a handset made their product famous and demand increased in the market. The mobile phones of Sony Ericsson are available in the market at affordable prices; so not only the adults but the school students and college students are also buying them. The people are not interested to sit in front of the computer system for long hours for chatting. Through the mobile with internet service they can log on to the internet at any time from anywhere. So, they choose mobile phones rather than computer systems. Further, mobile phone is lightweight so it is easy to handle. Christmas time is the best time when the sale for the handset increases tremendously.
“Sony Ericsson has experienced a “softening of demand” in markets where it has a strong presence, particularly in Western Europe. One factor: The average selling price of Sony Ericsson’s phones decreased, due in part to consumers opting for cheaper devices. Still, Sony Ericsson forecasts that the global handset market will grow 10 percent this year.” (Long 2008).
By considering the current market trends, Sony Ericsson will make a plan to increase global handset market, which brings them to take their own position in the global market.
|Weaknesses ||Strengths |
|Threats ||Opportunities |
Appendix – 1. Table – 1.
The strength of Sony Ericsson lies in the introduction and innovation of outstanding products. It also has powerful experience in mobile phone technology. The weakness of the company is, it is less effective in terms of distribution channel and lack strong partners and move the products down to the retail sales channel. The opportunities include the company’s strategy in doing things differently that differentiates its product from the competitors and it can rapidly exploit the market opportunities where the competitors fail to exploit. Threats represent the competition from rival firms such as Nokia and Samsung who are exploiting the lower segment.
Sony Ericsson will adopt a penetration strategy with a focus on growing sales with new products during the period of Christmas 2009 and the New Year 2010 in the UK.
The objective is to increase profits by 15% and offer strategic insights about how to position the company and its products to become competitive during Christmas 2009 and New Year 2010 in the UK.
The marketing objective of Sony Ericsson is to increase the sales by 15-20 % during Christmas 2009 and New year 2010 in the current market.
Currently, the target markets are divided into two segments – middle-income and high-income customers. The customer target segment includes college students, executives and professionals. The target market is dependent on the specific handset models such as
- The middle-income group mostly prefers handsets that are included in the Walkman branded phone series.
- The high-income customer prefers the handsets that are very expensive and which depicts the status symbol. It includes Cyber-shot branded phones, Bravia-branded mobile phones, UIQ branded range of mobile phones and Xperia.
Product Offerings: Sony Ericsson will offer
Walkman branded phones – it focuses on the college students and those who are more interested in music, because the students are more interested in entertainment.
Cyber-shot branded phones, Bravia-branded mobile phones, UIQ branded range of mobile phones, Xperia – these brands focus on those customers who are more attracted towards the luxurious products because these products are more expensive and are affordable only to those categories of people who have high earning capacity.
Sony Ericsson will position itself in the field of digital advertising to have competitive advantage among its strong competitors. It has also been positioned by its customers as Entertainment unlimited. The president of Sony Ericsson says that “Entertainment Unlimited is at the core of Sony Ericsson’s philosophy, building on the strength of our great entertainment assets such as Walkman and Cyber-shot phones and our unique service and applications integration.” (Sony Ericsson launches entertainment unlimited 2009).
From the beginning itself the company was striving towards “the true fusion of communication and entertainment.” (Sony Ericsson launches entertainment unlimited 2009).
The unique service and the advanced technological application have made the entire Sony Ericsson products distinct from others.
Technology is considered as a factor that has been improving day by day and Sony Ericsson is striving towards the introduction of mobile handsets which possess all modern facilities in them. In the current scenario, everyone has a mobile phone with him including the young and small children. The mobile phones of Sony Ericsson are equipped with latest features which they desire. Sony Ericsson is well known for producing world-class products and it is striving towards the introduction of its new model Xperia during Christmas with an expectation that it will attract customers and will lead to an increase in sales of the product and thereby increase profit.
It is planning to get in touch with more consumers and thereby to get hold of the market shares in the mobile phone segment during the period of 2009 Christmas and New Year 2010 in the UK. In the earlier days people rarely buy mobile phones, but now it has become common among people. Therefore, before introducing new model the company should consider the competitors in the market. The competitors of Sony Ericsson in mobile handsets are Nokia, Samsung and Motorola.
The industry where Sony Ericsson is competing is in wireless telephone handsets, telecommunication equipment and wireless telecommunication equipment. Before introducing any product into the market, the first thing to be taken into consideration is the market condition. The company faced loss for the last five quarters. The main reason was, the company failed to analyze the market condition. The customers were not in a position to buy mobile phones at a high price because many of them lost their job and many of them were feared that they might lose their job. So, when company introduced the latest model it became a failure due to poor response from the customers. “Sony Ericsson faces more problems than most in that its phones don’t do anything particularly well.” (Fermoso 2009).
The company should also concentrate on the design, because most of the phone models were a failure due to their size and transparent screen. The demand for the product can be increased by making the handsets more user-friendly. When compared to Nokia, the customers have a belief that even though they don’t have any knowledge regarding the handset, they can operate it very easily. So, with the introduction of new technology, the company should also concentrate to simplify operations.
The company should also improve its after-sales service, because the customer values an organization’s performance in terms of quality of service. As the product is much expensive, the warranty period can be given for one and a half years. The company should adopt simple operating system which can be used by all types of customers. Instead of going for more number models with high technology, the company can go for common products as they can attract a large number of customers.
Pricing is considered the most important decision and the crucial challenge faced by most organizations. “Underpricing a product will lead to reduction in revenues and overpricing it may lead to slump in demand.” (Anweshabh 2009).
The pricing strategy of Sony Ericsson should be changed. Currently the company has all its products priced at a very high rate. The main limitation of this pricing strategy is that the common people cannot afford this price. We can see that the customers who are using the Sony Ericsson handsets are mostly the high-income groups. The company can increase its sales by introducing a new product at a reasonable price and which is user-friendly. The strength of Nokia is that it concentrates on both the ordinary consumers as well as the high-income group. The advantage of Nokia is that the operating function is very easy, whereas for operating the handsets of Sony Ericsson, we require some idea. The company has decided to adopt a cost-cutting strategy to increase its sales for the coming year.
The place mix refers to the distribution channels that are responsible for distributing the products to the target customers. “The place is where you can expect to find your customer and consequently, where the sale is realized. Knowing this place, you have to look for a distribution channel in order to reach your customer.” (FW 15-marketing mix: objectives: place-distribution 2005).
The distribution process for Sony Ericsson handsets follows a two-tier system. Products are distributed from the company to the retailers; then the retailers deliver the products to the right consumers at the right time and in the right place. The company directly sells its product to the retailers. There is no involvement of the wholesaler in the distribution channel. The first party in the distribution channel is company itself. The retailers are selected based on their efficiency in the field of distribution. The company distributes its products in most of the places in the world. The target is to reach the ultimate consumers who need the Sony Ericsson handsets.
Sony Ericsson is very much dedicated to the distribution operations of its products. It says that, “If we decide that your product fits the needs of our own or third-party distribution channels, then we can help you meet the right people.” (Prizes 2009).
Mainly there are three distributing channels namely Play Now arena, Fun Downloads and Sony Ericsson application shop. All these channels help the customers to download all the software directly from the phone. It helps in downloading the latest ring tones, wallpapers, images, video clippings and animated contents and games.
Sony Ericsson has promoted its products by using different sales promotion strategies in order to create awareness in the minds of the consumers that a new product has been introduced in the market. For P1i phones, a scratch card was given to promote the product. That scratch card was an offer to download ten free software applications for a particular handset. It also promoted its model, K550i mid-range Cyber-shot phone by providing free Bluetooth headset for one year warranty. “Net sales and net income before taxes in the first quarter of 2009 continue to be negatively affected by weak consumer demand as well as de-stocking in the retail and distribution channels.” (Press release: Sony Ericsson sees continued weak sales for first quarter 2009 2009).
It also uses advertisements in newspapers, magazines, and journals and specifically on television whereby large numbers of customers are attracted towards the product.
The company can improve its customer services by developing more customer service programs, by introducing self-installed software for enabling the customers to upgrade their mobile phones without approaching the service centers of the company.
“To improve those weaknesses and threats, the company should, firstly, concentrate on maintaining and developing its distribution channel, work more closely with operators and run co-operative promotion programs, for instant, card and phone bundled promotion for new subscribers using operator’s network.” (Swot 2009).
Implementation and control
“Implementation control is designed to assess whether the overall strategy should be changed in light of unfolding events and results associated with incremental steps and actions that implement the overall strategy.” (Barnat 2007).
Each department and its responsibilities are depicted in the diagram shown below:
|Product strategy||Production manager|
|Distribution strategy||Marketing manager|
|Promotion strategy||Marketing manager|
|Price strategy||Financial manager|
Appendix-2. Table – 2
- The product strategy and all the production processes are controlled by the production manager.
- The distribution strategy and the promotional strategies are implemented and controlled by the marketing manager.
- The pricing strategy is implemented and controlled by the financial manager.
“An itemized forecast of an individual’s or company’s income and expenses expected for some period in the future.” (Budget: definition n.d.).
Appendix – 3. Table – 3
This is Sony Ericsson’s marketing plan for increasing its profit during Christmas 2009 and New Year 2010 in UK. Internal and external analyses have been done and based on those analyses, SWOT analysis has been done. A market objective is set to achieve the target market, product offerings and the positioning of the product is also decided. The marketing mix is also set accordingly. After all these, the implementation is done which makes the success of the plan and then finally budget is set to decide the cost to be incurred for each process.
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