Marketing plan proposal for second year in Canada

Microsoft
CANADA

Program
Objective of the meeting
Results of first year
Market environment
External environment
Internal environment

Marketing strategy for year 2

Financial forecasts
Controls

Objective of the meeting

Presentation of the strategies
that should let us reach our
marketing and financial
objectives

Results of first year

Best console launching in the
video game market
27% of market share from
January to April 2002
30,1% in June
Second place in the market
after Sonys PS2

Market
environment

External environment
OPPORTUNITIES
-

Canada: first market of the world

for Xbox (30,1% market share,
June 2002)

Sony PS2 is the market leader with

56% (April 2002) of market share
in Canada

Increasing
of
recreation market

Video games customers are not

loyal to a console, they are loyal to
a video game

42% increasing console

since November 2001

Advertising is expensive in Canada

Third-party software publishers

prefer to work with successful
video games console.

and
market

Market expected to increase again

(+51%)

More than 80% of Canadians are

connected to internet. The online
game is a real trend and so Xbox
have capacities to connect on-line

Game Cube passed to the third

place at the time of the Xbox
launch

The technology of Sony is difficult

to work for the game developers

Forecasts
Controls

leisure

Environment
Strategy

THREATS

Internal environment
Strengths

Environment

Strategy
Forecasts
Controls

Microsoft: the worldwide leader

of computer software.
Relationships with over 75
software publishers
Xbox has been launched with 15
games
Relationship with the US team
Video game market research
(survey about gamers, define a
precise target)
Relationships with game experts
Specific budget allocated to the
marketing programs
A technically superior product
Market leader NVidia co-designed
Xbox graphic processor
The team knows well Microsoft
policy and the video game market.
Good know-how
The Xbox website.
Public Relations have been taken
into account

Weaknesses

The Microsoft philosophy is not

really defined
Xbox is not a separate entity of
Microsoft: it is hard to create a
new brand image
Third-party software publishers
(the most important game
developers) preferred developing
games for the market leader,
Sony Playstation 2
Limited budget allocated to
advertising
The most expensive video game
console available on the market
Each of Microsoft team member
had been with the team for
several years: lack of new idea
Weakness of brand because
assimilated to Microsoft

Competition

Environment
Strategy
Forecasts
Controls

5 forces of Porter

Competition table
XBOX

PS2

GameCube

November 2001

March 2000

November 2001

Manufacturer

Microsoft

Sony

Nintendo

Retail price at lauch

Cdn$ 459

Cdn$ 449

US$ 199 (~Cdn$)240

Retail price on January

2002

Cdn$ 299

Cdn$ 299

US$ 199 (~Cdn$)240

-34,86%

-33,41%

Target

Males, 18 to 24

Males, 18 to 24

8 to 12

Quality

***

**

Image

**

***

**

Financial resources

***

**

Advertising resources

**

***

**

Partnerships with game

manufacturers

**

***

Relationships with
retailers

**

***

Range of games

**

***

27%

56%

17%

Releasing date

Price evolution

Environment
Strategy
Forecasts
Controls

Market share (spring

2002)

Product offering

Environment
Strategy
Forecasts
Controls

Keys to success
Good relations with retailers
Strong partnerships with game
developers

Environment
Strategy
Forecasts
Controls

An adapted communication
strategy

Marketing
strategy
for year 2

Marketing objectives
Reinforce the brand image of Xbox
showing its superiority.
Promote the games of the Xbox besides
our large target.
Launching of the Canadian Xbox website.
Improve relations with game developers
and retailers.
Environment
Strategy
Forecasts
Controls

Increase our market share of 12 points.

STRATEGY:

TACTIC 1:

improve brand

image

PROGRAMS:

Take part into a major

sport event

Advertising campaign
adapted to our target

Choose a new forceful
message

Environment
Strategy
Forecasts
Controls

Improve penetration of Xbox

TACTIC 2: act on game

developers

TACTIC 3:

act on retailers

PROGRAMS:

PROGRAMS:

> Good financial

conditions
> 70% contribution of
Xbox on game
advertisements
> Highlight our technical
simplicity for them

> Advertising in sales

outlets (demonstrations)
> Increase payment
delays
> Increase discounts
besides purchase
amount

Financial objectives
Xbox expect for a turnover of
215,700,000 $ Cdn minimum with
800000 Xbox sold in year 2.

Environment
Strategy
Forecasts
Controls

We must respect the budget

accorded by Microsoft for
marketing: 11 million $Cdn.

Target Markets

Our global target:

males
16 to 34 years old
about 4,351,000 customers (15% of the Canadian population)

Main target:
males
18 to 24
the first choice of Microsoft

Second target:
males
16 to 18 and 24 to 34

Environment
Strategy
Forecasts
Controls

Third target:
the rest of the population ( young females...)

Committees

Research

Purchase
occasion

Environment
Strategy
Forecasts
Controls

Wanabees

Fun seekers

Time killers

To finish the
hottest
game and
to find the
best tricks

To improve
their level
in order to
become
committees

Each
innovation,
each new
game or
console

For a hit and

for a
console
which
received
the
acceptance
of the
specialists

Games which
permit to
play in 2, 3
or 4
players
mode or on
line

Just for an
excellent
game and
which not
necessit
too much
time to
finish

7-12h/week

3-6h/week

Less than
3h/week

Usage

13h/week and
more

Perception and
beliefs

Game is their
world

Game is a
challenge

Fun
entertainment

Game is fun

A past time

Game is just a
pleasure

Marketing Mix
Product:
Xbox & Microsoft: a
separate entity
Launch more game

Price:
maintain the sale price:
Cdn$ 299

Promotion:
Xbox Canadian website
Advertising on sales outlet
A special offer for important occasion as
Christmas
Advertising in specialized press
Organization of press conference

Environment

Place:

Spot radio

to increase our shelving space

Strategy

Spot TV

Forecasts
Controls

Sponsorship
To sponsor different parties in famous
pub and nights club

a commission system for the

sales force
a mail-order selling

Marketing Research
A market survey to evaluate the
female market.
A research to identify what
customers expect from our website

Environment
Strategy
Forecasts
Controls

Financial
Forecasts

Sales Forecasts
PESSIMISTIC

Environment
Strategy
Forecasts
Controls

AVERAGE

OPTIMISTIC

Xbox sold in year 1

452,458

452,458

452,458

Market growth year 2

40%

51% (R. Mugford)

60%

Xbox sold in year 2 with

same market share
(prevision)

452,458 * 1,4 =
633,441 units

452,458 * 1,51 =
683,211 units

452,458 * 1,6 =
723,932 units

Market share June 2002

30,1%

30,1%

30,1%

Market share growth

(prevision)

8 points

12 points

16 points

Xbox sold in year 2 with

same market share
considering
provisional market
share growth

38,1 * 633,441 / 30,1

=
801,797 units

42,1 * 683,211 / 30,1

=
955,587 units

46,1 * 723,932 / 30,1

=
1,108,746 units

Retail price

Cdn$299

Cdn$299

Cdn$299

Retailers gross margin

10%

10%

10%

Provisional turnover per

sold Xbox

299 * 0,9 = 269,1

299 * 0,9 = 269,1

299 * 0,9 = 269,1

Xbox Year 2 provisional

turnover

269,1 * 801,797
=
Cdn$215,763,572

269,1 * 955,587
=
Cdn$257,148,461

269,1 * 1,108,746
=
Cdn$298,363,548

Approximation

Cdn$215,700,000

Cdn$257,000,000

Cdn$298,300,000

Marketing Expenses Forecast

TACTIC 1:

Sponsorship of a national Canadian sport event (Ice Hockey)

Cdn$2,500,000

Xbox bus and advertising for Xbox bus

Cdn$350,000

TV airtime for Xbox and 1st party games 6 months

Cdn$1,760,000

Radio 6 months

Cdn$220,000

Magazines 4 months

Cdn$420,000

Posters 3 months

Cdn$630,000

Press 4 months

Cdn$770,000

Xbox.ca website (development and webmastering)

Cdn$300,000

Sponsorship of parties organized in famous pubs with demonstration of

Xbox and gift offering

Cdn$650,000

TACTIC 2:

Environment
Strategy
Forecasts
Controls

Improve brand image

Act on game developers

TV airtime for 3rd party games 6 months (Cdn$2,640,000 * 70%)

Cdn$1,848,000

Magazines for 3rd party games 4 months (Cdn$420,000 * 70%)

Cdn$294,000

TACTIC 3:

Act on retailers

Christmas bundle

Cdn$867000

Advertising and demonstration in sales outlets

Cdn$300,000

TOTAL

Cdn$10,909,000

Controls

Schedule
Nov.
2002
Task 1
Task 2
Task 3
Task 4
Task 5
Task 6
Task 7
Task 8
Task 9
Task 10
Task 11

Environment
Strategy
Forecasts
Controls

Task 12
Task 13

Dec

Jan
2003

Feb

Mar

Apr

May

Jun

Metrics
Metrics allow to measure the result of our
different marketing operation.
We plan:
A survey of notoriety in order to evaluate
the repercussion of our action of
communication (advertising on sales outlet,
sportive event)
Environment
Strategy
Forecasts
Controls

Evaluate the level of sales during the period

concern by our action of communication in
order to see evolution.

Microsoft
CANADA