8
Sep

NINTENDO´S WII AND THE POWER OF SEGMENTATION

Written on September 8, 2007 by Ignacio Gafo in International Marketing

The story of David vs. Goliath seems to be here again: Small Nintendo vs.the giants Sony and Microsoft. And again ,as in the story, the smartest one has been able to win the first battle (the war will definitively last for years!).

I will start quoting an article from Digital Trends that points out:

New figures from market research firm NPD show Nintendo’s Wii has dominated console sales during the period next-gen system have been available.

WII1.bmp

Remember a year ago—or maybe six months ago—when most industry-watchers were expecting the next-generation video game console wars to center on Sony’s PlayStation 3 and Microsoft’s Xbox 360? New sales figures from market research firm NPD covering the period from November 2006 to February 2007 show the Nintendo Wii significantly outselling both its more-powerful (and more-expensive!) competitors.
According to NPD, the Nintendo Wii sold 1.86 million units from November 2006 through February 2007; in comparison, Sony sold 1.1 million PlayStation 3 consoles and Microsoft managed to move 1 million Xbox 360s.
Analysts attribute the Wii’s success to pricing—the system sells for significantly less than either Microsoft’s or Sony’s offerings—and also to the console’s innovative, interactive controls and friendly interface, which are credited with attracting customers who might not otherwise consider purchase of a video game system.
So far, industry-watchers don’t find the Wii’s lack of online multiplayer games a significant shortfall to adoption, although Nintendo plans to bring out its first online-capable title, Pokémon Battle Revolution, at the end of June.

The Marketing Theory explains that you have to identify uncovered needs in a market , segment or divide this market according to a criteria, decide which segments you want to go for and define a marketing plan and proposition coherent with it.

It seems to be really easy, but real life shows that it is not! All industries are full of “me too” products instead of innovative approaches.

Nintendo has been extremely smart in their approach as it haS discovered and attacked a new and unexplored segment in the video-console market: Users that want to have fun and do not look for best of the best graphic resolution (Playstation and X-Box target group), but for ease of use and simplicity.

By doing this, they have been able to do the following:

• Expand the video-game market, attracting new users that would not have purchase a console.
• Attract a very profitable segment: One with a higher purchasing power than teenagers and what is more important, less likely to get pirate games.
• Be the only player in that “ease of use” segment. So no need to aggressive discounts and to share the market with your competitors.

WII3.bmp

Sure, as the article points out, that the price was well-thought and also made a difference, but you also have to bear in mind that this a “razor and blade” business where most of its profit is got through the games and not through the console itself. Thus in the end of the day, they will be able to milk and profit from their clients.

This makes clear to me that we have to rethink our businesses and our segmentations. Maybe, a Wii opportunity is there in your industry!

Comments and opinions are very welcome.

Think Different!!!

Ignacio Gafo

Comments

leverage September 9, 2007 - 12:56 pm

Nintendo is not a small company! they are once recognized as a leader in console gaming

jigafo September 9, 2007 - 6:40 pm

As everything in life, the size is relative.
I agree that in absolute terms Nintendo is a large company, but you will coincide with me that it is, when compared whith giants such as Sony and Microsoft.

Aristotele November 3, 2008 - 2:21 pm

Nacho,
Very Interesting article, highlighting the Nintendo’s foresight and providing a great exemple of brand positioning! In my opinion this new strategy was the result not only of the different Nintendo budget vs Microsoft and Sony but also of the accumulated (and big) delay in the video games technology. Indeed 10 years ago Nintendo tried to attach PS1 with the old platform and it wasn’t a good idea…
I think that they are applying the same strategy for Nintendo DS, attacking a different segment than PSP and introducing the concept of brain training.

Steve November 6, 2008 - 2:25 am

Xbox 360 was released a year before the Nintendo Wii in 2005, so of course it is shown as having the least amount of sales from 2006 to 2007.

Luigi Scatteia October 21, 2009 - 2:23 pm

I guess it’s important to notice that Nintendo, before the DS and Wii, was cornered and was bound to be kicked out of the hardware business just like Sega if it would have continued to play according to their rule. They HAD to think different.

Nintendo tried the new strategy with the Nintendo DS first, and they did it with extreme caution: at the time of its presentation, the DS was deemed a third pillar, complementing the Gamecube and the Gameboy Advance offers. It was clear that Nintendo was not really sure about the potential of the DS, and didn’t want to waste a solid brand like the GameBoy one with something that was, at first, deemed by everybody in the industry just as a gimmick.

After the success of the DS, the 3 pillars strategy was just forgotten, and the Gameboy brand is now quiescent.

With the Wii, after the DS success over the PSP (creativity and semplicity of use over raw processing power), they were already more confident. The Wii was dubbed Revolution, at first.

I’d love to have an article from you, Nacho, on the very name of the new console. I can tell you that when the name was announced, the boards all over the world went nuts. I’d love to hear your opinion on the name choice, and on the possible impact it may have had over the product appeal to the masses.

Antoine July 15, 2010 - 11:09 pm

Hello,

Do we now have more information regarding the segmentation of the Wii owners/users?

I have been looking on the internet, but don’t seem to be able to find any detailed data about that.
Do you have any websites that could be useful?

Thank you very much in advance for your help :)

Antoine

3ds black July 5, 2011 - 12:52 pm

hi

nice info and useful blog

thanxxx

http://3dsblack.net/

wii November 27, 2011 - 7:46 am

wii is making my kids crazey. Don’t sing it it is a copyright :)

wii November 27, 2011 - 7:49 am

oops typo error
wii is making my kids crazey. Don’t sing it is a copyright :)

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