By launching the game console Xbox, Microsoft did not only introduce a new
product but stepped into a totally new market where there company did not have any
experience yet. Although they had a huge marketing budget, they focused on
spending it as effective as possible. Therefore Microsoft’s marketing team had to find
out, who their target customers are and with what marketing strategy they could reach
their challenging goal to become leader in the game console market. But has their
way of segmenting the market and choosing a marketing mix for the Xbox really been
successful? The Marketing concept consists of three principles that hold that achieving
organizational objectives require determining needs and wants of targets markets and
delivering the desired satisfactions more effectively and efficiently than competitors
do (Hoffman et al 2003, pp.10-11). Microsoft took advantage of all three principles. Microsoft did put enormous effort
in identifying potential customers’ needs. The research was concentrated on so called
“hardcore gamers” who spend more than 25 hours playing a week. This group was
seen as early adopters as well as opinion-leaders. Of high importance were an
appealing design to young customers and performance like speed of the console and
high quality of audio and graphics. [...]
Table of Contents
1. INTRODUCTION
2. MARKETING CONCEPT
2.1. Microsoft’s Application of the Marketing Concept
2.2. How does Microsoft create Value to the Customers?
3. TARGET MARKETS
3.1. Market Segmentation
3.2. Target Markets of the Major Players
3.3. Comment on Major Player’s Choice
4. MARKETING STRATEGY AND MARKETING MIX
4.1. Strategy and Positioning
4.2. Marketing Mix
4.2.1. Product
4.2.2. Place
4.2.3. Promotion
4.2.4. Price
4.3. Evaluation of Microsoft’s Marketing Mix
5. CONCLUSION
Research Objectives and Key Topics
This report analyzes the entry of Microsoft into the competitive video game console market with the Xbox. It evaluates the company’s marketing strategy and marketing mix to determine how Microsoft identified target segments and created value to gain a foothold against established industry leaders like Sony and Nintendo.
- Application of the marketing concept to a new business environment.
- Market segmentation strategies within the computer games industry.
- Evaluation of competitive marketing strategies and positioning.
- Analysis of the four pillars of the marketing mix (product, price, place, promotion).
Excerpt from the Book
2.1.Microsoft’s Application of the Marketing Concept
Microsoft took advantage of all three principles. Microsoft did put enormous effort in identifying potential customers’ needs. The research was concentrated on so called “hardcore gamers” who spend more than 25 hours playing a week. This group was seen as early adopters as well as opinion-leaders. Of high importance were an appealing design to young customers and performance like speed of the console and high quality of audio and graphics. Therefore the design of Xbox became modern and was equipped with fast processor and games were designed so that games were faster, with better quality graphics and sound (www.business2000.ie). As more than 20 quality games were available at the launch time Microsoft erased a main concern of gamers having not enough choice. Since Microsoft launched the Xbox worldwide the company assembled many resources. About 5000 gamers and game creators were involved in the development of the Xbox. The global marketing campaign did cost USD 500 million (Elkin 2000). To offer the game console at a competitive price Microsoft accepted a loss of USD 150 for each sold consoles. Instead of setting up a price covering all costs Microsoft accepted the loss per console. The company did neglect profits in the launching period in order to reach its long-term objective to gain a high market share (Stegemann 2004).
Summary of Chapters
1. INTRODUCTION: Outlines Microsoft’s entry into the game console market and sets the objective of evaluating the success of their market segmentation and marketing mix.
2. MARKETING CONCEPT: Defines the core principles of the marketing concept and details how Microsoft applied these to the Xbox development, specifically targeting hardcore gamers.
3. TARGET MARKETS: Discusses various methods of market segmentation in the gaming industry and compares the target market approaches of Microsoft, Sony, and Nintendo.
4. MARKETING STRATEGY AND MARKETING MIX: Examines Microsoft’s penetration strategy, positioning as a high-performance console, and the implementation of the four Ps (Product, Place, Promotion, Price).
5. CONCLUSION: Summarizes that while the product launch was highly visible and achieved respectable market share, Microsoft fell short of becoming the market leader, highlighting the importance of game variety and broader demographic targeting.
Keywords
Microsoft, Xbox, Marketing Mix, Market Segmentation, Hardcore Gamers, Penetration Strategy, Gaming Industry, Market Share, Competitive Positioning, Product Launch, Consumer Needs, Online Gaming, Video Game Console, Strategic Marketing, Brand Positioning.
Frequently Asked Questions
What is the primary focus of this business report?
The report examines Microsoft's entry into the gaming console market, specifically focusing on how the company utilized marketing concepts and strategies to launch the Xbox.
What are the central themes covered in the text?
The core themes include market segmentation, strategic market penetration, the implementation of a comprehensive marketing mix, and competitive analysis against industry giants.
What is the main objective of Microsoft's marketing strategy?
The primary goal was to achieve long-term market share growth by utilizing a market penetration strategy, which involved heavy investment in promotion and accepting initial losses on hardware sales.
Which methodology is used to evaluate the Xbox marketing approach?
The authors employ a structured marketing framework, analyzing the product through the lenses of target market identification and the four dimensions of the marketing mix.
What aspects are addressed in the main part of the report?
The main part covers the theoretical foundation of the marketing concept, the segmentation of the gaming market, detailed analyses of the marketing mix (Product, Place, Promotion, Price), and an evaluation of Microsoft's strategy.
Which keywords best characterize this work?
Key terms include Microsoft, Xbox, Marketing Mix, Market Segmentation, Penetration Strategy, Hardcore Gamers, and Competitive Positioning.
Why did Microsoft target "hardcore gamers" specifically?
They were identified as early adopters and opinion leaders who generate a significant portion of industry revenue, aligning with the 80/20 principle.
Did Microsoft reach their ultimate goal of becoming the market leader?
No, the report concludes that while the campaign was a success in raising awareness and gaining market share, they did not achieve leadership, suggesting a need for a broader target approach.
- Quote paper
- Stefan Lacher (Author), Florian Roth (Author), David Schumacher (Author), Florian Keller (Author), 2004, Business Report Microsoft Xbox. Marketing concept and strategy, Munich, GRIN Verlag, https://www.grin.com/document/25484
