1.3 Organisational Background Panasonic Corporation is a Japanese multinational Electroics corporation located in Osaka,Japan.Panasonic was established in 1918 by Konosuke Matsushita, a vendor of duplex lamp sockets.It is one of the largest Japanese electronics producers. Main competitors are Sony,Toshiba,Sharp Corporation and Canon. Corporation produces electronic products under the brand names of Panasonics and SANYO. In 1927, the company founder adopted the brand name “National” for a new lamp product and in 1955, the company labeled its export audio speakers and lamps as “Panasonic”, which was the first time it used the “Panasonic” brand name. Again the company began to use a brand name “Technics” in 1965.These multiple brands lasted for some decades. In 2003, the company announced “Panasonic” as its global brand, and set its global brand slogan, “Panasonic ideas for life.” The company began to unify its brands to “Panasonic” and, by March 2004 replaced “National” for products and outdoor signboards, except for those in Japan… In January 2008, the company announced that it would phase out the brand “National” in Japan, replacing it with the global brand “Panasonic” by March 2010
Mission of the company underlying company basic management philosophy is contribute to the progress and development of society and the wellbeing of people worldwide. Company aims to become the No. 1 Green innovation Company in the Electronics Insustry.Company consider environment as its heart in all the businesses and ensure to secure a sustainable society along with the business growth by promoting green life innovation to help reduce environmental impact of its business activities to a greater extent while recommending this kind of business style be taken up across the society. In 2012 company undertook a major reorganization of its group of business including Panasonic Electric Works Company Ltd and SANYO Electric Company Ltd. This reorganization has led the company to move from business model based structure to customer perspective. Through this new structure is focused taking every effort to create synergies that take full advantage of the Group’s products, systems and services. “Ideas for life” brand slogan of Panasonic ensures continuation of enriching the lives of people worldwide and contribution to the future of the earth and for the progress of the society. Company earns revenue of ¥ 7846.2 billions in 2012 and operating profit of ¥ 43.7 billion. (Panasonic Annual Report, 2012, P.1-4)
1.4 Rationale of the Research Today almost every business and service organizations use corporate and business strategies to win the market. Likewise Panasonic Corporation, a major electronic industry players use strategic marketing tools and techniques. This research study helps to discuss about the product diversification strategy in Electronic industry, importance of diversification strategy on business performance, present product diversification strategies used by Panasonic, impact of product diversification strategy on market share of electronic industry and the customer demand for different types of electronics products of Panasonic. It can be argued about the practicality of the study because real life evidences will be used to discuss the problem in a meaningful manner. Hence it is clear about the rationality of the study.
1.5 Significant of the Research The study provides knowledge and ideas for management of Panasonic Corporation and other electronic manufacturing companies in the marketplace about the appropriateness of identification of diversification strategies as a strategic planning aspect and its importance of use for the improvement of business performance and to be competitive. Further, different readers will be able to understand the benefits of identification of different product diversification strategies towards increment of organizational performance. The researcher will be able to get a better understanding about continuation of research work and gather knowledge regarding product diversification strategies, how companies adopt those strategies, impact of product diversification strategy on market share of electronic industry etc. Therefore, research study will be significant to undertake in order to improve knowledge, understanding, business decision making of different parties.
1.6 Statement of the Problem Electronic industry has been too competitive in applying marketing strategies and major Electronic companies have faced lot of rivalry to be competitive in its marketing activities. Companies use different diversification strategies as a part of corporate strategy to improve organizational performance in terms of sales over the other competitors in the market place. Panasonic Corporation is a global major player in Electronic industry. Reason behind the success is the effective marketing strategies, including the product diversification strategies adopted by the company. Hence this research study helps to identify the product diversification strategy in Electronic industry as a whole, importance of diversification strategy on business performance, present product diversification strategies used by Panasonic, impact of product diversification strategy on market share of electronic industry and customer demand for different types of electronics products of Panasonic Corporation.
1.7 Research Aim The researcher aims this study to investigate the impacts of products diversification towards market share of consumer electronic of Panasonic
1.8 Research Objectives This study will be conducted;
To review the literature on product differentiation strategies in electronic market
To identify different types of product diversification strategies
To identify the importance of product diversification in consumer electronic
To analyses the relationship between product diversification and market share of Panasonic Corporation in consumer electronic industry
To investigate customer demand and satisfaction towards different consumer electronic products of Panasonic
To introduce suitable strategies to product diversification in order to improve the customer demand and market share
1.9 Research Questions This research will attempt to answer;
What made Panasonic Corporation to be successful in electronic industry?
How Panasonic compete with its competitors using diversification strategies?
What is the relationship of product diversification strategies with business performance?
What is the successful product diversification strategies used in electronics industry?
1.10 Hypothesis This research will assume following hypothesis,
H0: There is no relationship between product diversification strategies and market share of Panasonic Corporation
H1: There is a relationship between product diversification strategies and market share of Panasonic Corporation
Literature Review 2.1 Introduction This section considers about specific literature about the research topic of “Investigation the impacts of products diversification on market share of consumer electronic industry: Case study of Panasonic”
2.2 Product diversification strategies in consumer electronic market Basic concept of diversification concept was defined by Ansoff (1957) as product diversification means the entrance to new markets with new products. Later on, Dundas and Richardson (1980) specified product diversification as differentiation of markets and targeting of more than one target market. And Amit and Livnat (1988) expressed the motives for diversification and through that study he identified main motive is financial motive and identified the business diversification as the expansion of the size of business achieving economies of scale and generating a combined effect on overall oraganization’s performance. Furthur number of studies on the topic strategic management have analysed relationship between diversification strategy and organizational performance (Shen et al., 2011 and Burgers et al., 2009)
Kotler (2002, P.45) has identified three strategies a company can follow to grow the company fast. Intensive growth strategy is the identification of opportunities to accomplish more growth within the company’s current businesses. Integrative growth strategy means the identification of opportunities to acquire or build businesses that are already related to the company’s current businesses. Diversification growth strategy means identification of opportunities to add attractive businesses that are unrelated to the company’s current businesses.
According to Ansoff’s product market expansion grid it has identify three types of diversification strategies. The concentric diversification strategy the horizontal diversification strategy and conglomerate diversification strategy. In concentric diversification company looks for new products that have technological or marketing combined effect with existing product lines, though the new products are target to a different group of customers. In horizontal diversification strategy, the company seeks for new products that relates to its current customers but technologically unrelated to the current product line. The third strategy, conglomerate diversification strategy, seeks new businesses that have no relationship to the company’s current technology, products, or markets.
According to World Electronic Industries 2008 -2013 Report the electronics industry not only consists with mass market or consumer electronic products also includes electronic products used in transport such as cars,trains.planes etc, electronics used in defence equipment, in IT infrastructures, in manufacturing process or professional services used t to enhance productivity. In electronic Industry consumer products only represented 53% of the electronics industry in 2008.This report also has mentioned that in 2008 the electronics industry represented 1140 billion Euros and it is equivalent in size to Car industry which is 1800 billion Euros in 2008. Expansion of electronics and business growth cycles are the origins of such a fast development. Earlier in 60s and 70s government driven this, enterprises in the 80s and individuals started this in 90s to up to now. The electronics industry is re investing since its inception with huge Reasearch and Development investment to produce new products.
At present society concerns on energy, health and security and expects new electronic solutions that are not being developed yet providing long lasting growth perceptions for the overall industry for the coming decades.Eventhough the electronics industry exhibits more mature growth, still it is a fresh industry with upcoming major growth perspectives. Accordingly it can argue as the development in electronic industry has occurred due to heavy investments in research and development leading to new products confirming product diversification strategy.
Currently active process of change in the electronics industry has increased production of electronic products that are free of hazardous elements. A transformation has taken place with the support of almost all businesses to eliminate polyvinyl chloride (PVC) and brominated flame retardants (BFR), which has led to the introduction of many products free of PVC and BFRs. This is noticeable in mobile phones, computers with a little progress with TV. Several companies have had to revise their original deadlines for the elimination of the most hazardous substances. Companies are in the process of translating these commitments into products on the market, from individual components or some niche products and extends to the complete elimination of PVC and BFR from comprehensive product lines. Mobile phones have shown the most progress, with most market leaders now produce halogen free mobile phones, representing at least 60% of the market at 20,111, followed by the PC, in the phase of plans market leaders means that at least 53% of the market will be halogen-free in 2012. It is clear that technical barriers to eliminating PVC and BFRs have been mostly overcome, the iNEMI Industry Association has published a timeline showing that halogen-free components for PCs (laptops and desktops) will be widely available supply chain in late 2011, including the evaluation and qualification of the parts of printed circuit boards and high performance power cables 2. TV manufacturers have shown the least progress. The remaining block still uncertain availability of free components of PVC and BFRs across the supply chain. Only 21% of the TV market is expected to be PVC / BFR in 2011, and depends on the companies that meet its commitments. (Electronics Industry -Milestones on the Road to Greener Electronics,2010,P.1)
2.3 Product diversification strategies of Panasonic Corporation According to Panasonic Website (2013) Panasonic carry out businesses in four areas, namely residential, non residential, mobility and personal. ‘Future Craft ‘the design philosophy of Panasonic which incorporates the spirit of creativity attached with in the heritage of Japanese craftsmanship adhere to principles of universal design and sustainability. Company design wide rang products for consumer electronics such as audio visual equipment, communication devices, home electronics, cosmetics appliances, lighting, cables, energy management, construction supplies, homes, buildings and retail environments. Company’s main mission is to supply customer satisfaction in terms of product design globally. Panasonic’s design centers spread in the world together expect becoming the number one Design Innovation Company by 2018.
It is clear that Panasonic look forward with an intention of doing product diversification in terms of product design through the Design Company. The latest concept of eco design of Panasonic supports customer’s maintainable lifestyle by imagining the energy or resource saving features of our products. Eg.Eco Navi Product Family of Panasonic .Eco Navi is a technology distinctive to Panasonic, in which the appliance self regulates itself when it identifies a chance to save energy. For example: A washing machine will prevent itself from over washing when it recognizes the soil level of the load. A refrigerator will recognize when the door has not been opened for a long time (in night) go on a power saving mode.
Grimm and Malschinger (2010:P.4-8) Specified six types of product differentiation strategies as product differentiation, unique characteristics, price differentiation,nitche offers, differentiation through services, differentiation through direct communication , and through packaging. So Panasonic Corporation should not limited its product diversification strategy only to the product differentiation through design concept.
In 2013 Panasonic has incorporated research and development Centre in its new washing machine factory in Vietnam. The new factory concentrate on the improvement of Panasonic’s advanced eco and smart technologies underlying its obligation for environmental sustainability. The factory focuses to achieve 50% of production for the local market and the rest 50% for export to other ASEAN countries. It targets manufacturing capacity of 600,000 sets of washing machines per annum employing around 300 locals by 2014. R
Market analysis of nokia
Marketing Assignment Help The Nokia target market segment consists of specific group of customers like various age groups of people who focuses its marketing efforts. The Nokia target is likely to have two main reasons; the first is to gain profit and secondly is to aim at consumers that need form of communication. For example, it is targeted mostly at consumers with the age of 19-39 years old looking for entertainment. It is to attract them to use this specific brand and to promote itself in the market.
Nokia can be described as a means of communication in today technological world. In terms of demographics it can define that Nokia target market apply to marketers commonly use in segmenting markets which also include gender, ethnicity, income, and social class. For example, to attract customers Nokia would have to come out with new ways of improving their cell phones, to add new applications or software to make it unique from its competitors. Not to mention, to gain reputation as a company that manufactures quality and provisionary cell phones. Gender on the other hand is another demographic variable commonly used, for example if Nokia were to aim their products at various age groups they would have to know when, where and how to aim. Thus, results could be astonishing then what seem to be. Ethnicity is a another variable of segmenting markets like Nokia, for example Nokia captures market in Asia hoping to attract buyers and dealers to sell their products and in turn gain status at that. Another is income, it often provides way to divide markets because it strongly influences people product needs. Product like Nokia segmented by income include, cell phones, wireless headset, memory cards and other small parts like battery, cable and installation Cd guide. For social class, consumers tend to be more alike as occupying inferiority or superiority according to their own, thus they are able to move up or down during their lifetime.
Psychographics variables of Nokia include personality characteristic, motives and lifestyles, to segment markets. Personality characteristics can be useful for segmentation, like when Nokia is competing with other competitors like Motorola, Samsung, and Sony Ericsson. However, this segmentation can also be very risky, although when appealing to a personality characteristic Nokia also must view opinion from different view. When motives are used, Nokia will probably be divided into different types of categories and likely will be judge by consumers like dealers and buyers. For example, Nokia target from various age groups but mostly aim at 19-39 years old to attract the younger generations into buying their products and hence enjoy growth rate sales as a result.
Lastly, behavioral variables for Nokia can be defined as a market according to some feature of consumer behaviors towards it. For example, Nokia can be group into environmentally friendly and will most probably be careful in producing cell phones in the near future due to popular demands. To satisfy the consumers needs Nokia have to be fully aware that setting prices, or even initiate special promotion and distribution activities are very vital in the upbringing of the brand name. For example, a consumer who purchases a cell phone is interested in the specifications or software. Thus, consumers are segmented directly according to their needs and wants.
B. Product (Core, Actual and Augmented Products) nokia core_10nokia core_07 (Nokia Core Product)
As you can see in the picture above, this particular cell phone happens to be a Nokia core product. The design is taken from a famous movie call the Star Wars, this product has many features that are able to solve problems for consumers. For example, if a consumer were to purchase this particular product expects it to be in ‘tip top’ condition which means brand new and not spoilt. Without the benefits, this product has no value in the market.
The actual product of Nokia which includes the core product represents the consumer most basic expectations of a product or service. It is here that basic and identifiable differences between dealers begin to surface. For example, in order to meet expectations of the actual product Nokia has created the product so that consumers have fully understanding of. In the second picture above, it tells that consumers can drag and drop the things that they wan onto the computer using the Nokia cell phone as a mouse. For example, when purchasing this particular device it is also important that a consumer consider the style of the device, the choice of applications, operational software and other extras.
Lastly, the augmented products of Nokia, can be define as a bundle for a specific product or service that the consumers expect. For example, the augmentations for a Nokia product may include an extensive warranty and product support package. But it also comes with a disadvantage like differentiating features and consumer needs or wants. Plus such augmentations are not always successful, particularly when it’s faced in reality majority does not like it because it have’s too many hardware or it could also mean that it is too complicated and not user friendly at all. Another reason is that Nokia cell phone could have lots of functions that users find it very difficult to use and instead prefer a less sophisticated cell phone. Hence, consumers should be very careful in choosing the right product to avoid regrets and dissatisfactory results.
(Branding, Packaging, Warranties and Customer Service) Nokia branding has been recognize worldwide in today world, Nokia branding strategy involves or shall I say Nokia Group the Finland based manufacturer of mobile has been steadily working on the brand name. Its effectiveness and efficiency has even knock off mobile producer Motorola for the number 1 spot. Nokia has even succeeded in lending their personality and not even give out them names. Not to mention, there are three degrees of brand loyalty which includes recognition, preference and insistence. Brand recognition occurs when consumers see that Nokia exists and views it as an alternative purchase if the preferred brand is unavailable. For example, the Nokia branding strategy proves that its brand can be intangible, including ideas and places. Whereas, brand preference is a stronger degree of brand loyalty and brand insistence occurs when a consumer wants a specific brand like Nokia and will accept no substitute and is willing to spend a great deal of time and effort to acquire it.
The picture shows the packaging of Nokia cell phones, packaging functions are manufacture from Nokia on factory and company which is located in Finland. Its purpose is to provide protection from any damages to the cell phone. Another function of this packaging is to offer convenience to consumers and also dealers. For example, the manual guide and installation is provided in the package when consumers buy the cell phone. Not to mention, cable memory card and battery are also put into the box for protection and it’s also easier to manage rather than splitting them and costing of the outcome is also not cheap. A third function of packaging is also to promote the product by explaining the details of the cell phones like the features, benefits and image to the consumer.
Nokia warranties usually include 24 months for the mobile device, twelve months for accessories (whether included in the mobile device sales package or sold separately). Six months for the batteries, chargers, headset and so on and a ninety days period for the replacement, and the repairing of any other items.
Lastly, the Nokia Customer Service is usually directed at their website, this is to ensure that consumers do not get the wrong idea and will ask question when is necessary. Consumers can always go to the Nokia website and ask question regarding their cell phone and get feedback from the Nokia Company. Also, remember to ask questions only related to Nokia else questions that do not regard the specific request will most probably be ignored. Also, instead of email-ing those consumers can give Nokia a call also if they find that email is a slow process of having questions being answer slowly. Nokia deserves the right to help those in need of their assistance and requirements. Nokia customer care line is usually the form or means of communicating and getting answers quickly then email.
D. Distribution Nokia distribution channels would involve activities that make products available to consumers when and where they want to purchase them. For example, Nokia Corporation has signed with VoIP service of Vyke AS, Mobile IP under the terms of distributing their cell phones or shall I say their products worldwide. This in turns also helps VoIP service of Vyke AS, Mobile IP gain profit and help raise their reputation to be expertise. The ways that consumers can obtain the product is by finding its location of the whereabouts of the Nokia retailer, as for the service of the product consumers can visit the Nokia website for more details and information regarding it. Other channels include TESSCO technologies; to expand the distribution Nokia has selected this particular company to leverage its customer network and superior supply chain management capabilities to open new distribution channels for Nokia cell phone original accessories.
Lastly Nokia brilliant strategy is to have its products at the right time and in convenient locations. In dealing with the TESSCO technologies and Vyke AS, it is vital that Nokia carefully plan and strategize their work plan and their workforce together. With these objectives in mind, Nokia will be able to succeed and make its product available to consumers through stores, mail order, catalogues and website ordering. Nowadays, ordering and buying online is one of the common things in consumers. But what is more surprising is how Nokia can achieve it by supplying all the products and in time. The basic strategy of Nokia is to be present in all price ranges. This strategic plan helps them by attracting consumers from around the world to buy their product, for example like the Nokia Smartphone N97 has sold 500,000 since its launch in June.
E. Promotion http://www.youtube.com/watch?v=SbxyLnwFSvI http://www.facebook.com/#!/nokia http://blogs.nokia.com/
There are four possible elements of a promotion mix which are advertising, personal selling, public relations and sales promotion. As you can see in the video above you, this is the advertisement of Nokia product n900. We can conclude that advertising is a paid non-personal communication about an organization and its products transmitted to a target audience through mass media like the video shown above. Advertising on YouTube also helps consumers to see and review the specifications of the product that they might consider buying it. Not to mention, Nokia nowadays has been so popular that advertising on the social network call “Facebook” has even pop out. Consumers who have an account with Facebook can also see the ongoing promotions that Nokia has produce. As for the blogs, Nokia has created a website that helps consumers read about the featured articles and helps them gain knowledge about Nokia particular products.
Whereas, for personal selling Nokia would probably be paid personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation. Personal selling also consists of three types of communication for Nokia, which are the kinesics communication, proxemic communication, and tactile communication. Kinesics communications are usually movement from the head, eyes, arms hands, legs and body. Nokia form of proxemic communication is by communicating in the physical distance like face to face. For example, a consumer may be displaying a lack of interest in the Nokia product or expressing a dislike to the dealer.
Public relations for Nokia are also important to the organization as well, public relations are a broad set of communication efforts to create and maintain favorable relationships between Nokia and its stakeholders. Nokia also share public relations with top video sharing sites like ‘YouTube’, ‘Vidder’ and ‘Tubemogul’. This websites help Nokia promote its product while receiving reputation for it, other website also includes photo sharing sites like ‘Flickr’ and ‘Picasa’.
Lastly, the sales promotion although Nokia doesn’t stress much on it, the Nokia company stresses more on the advertising rather than on the promotion itself. The Nokia sales promotion is an activity that acts as a direct inducement, offering added value or incentive product. I will try to emphasize on how Nokia are doing the sales promotion, first of all we must know that sales promotion and promotion is on a totally different level. Generally, when Nokia companies employ advertising or personal selling, they depend on them continuously or cyclically. However, a marketer’s use of sales promotions tends to be irregular and seasonal. With that I conclude that Nokia is a large company that has benefits that some may agree or disagree.