Marketing Weblog: NINTENDO´S WII AND THE POWER OF SEGMENTATION

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!).

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

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.

• 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.

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

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

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.

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.

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.

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