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A Brief History of Nintendo

Nintendo started as a Japanese playing card manufacturer and remained in this industry until 1974 when it created the video game market with the Magnavox Odessey. Nintendo was founded in Kyoto, Japan, in 1889 under the name of Nintendo Koppai by Fusajiro Yamauchi (Nintendo History). They made decks of playing cards, known as Hanafuda, in Japan. The cards were made by hand originally and became very popular. As demand soared, Yamauchi hired assistants to mass-produce his cards and he opened up a second shop in Osaka. Nintendo took off as one of the largest card makers in the world and maintained that status until the 1950’s.

Since then, the company has been committed to creating new and innovative video game consoles and games like Nintendo Entertainment System, Super Nintendo Entertainment System, N64, Game Cube, Game Boy, Game Boy Color, Game Boy Advance, Game Boy Advance SP, Game Boy Micro, Nintendo DS, Nintendo DS Lite, Super Mario Brothers game series, Donkey Kong and the Zelda game series (Thompson, Strickland, & Gamble, 2010, pp. C-238-239).

In 2006, the company released a brand-new and unique gaming system, Nintendo Wii, which won the majority of the video game console marketing share. Currently, Wii console and game sales have dramatically dropped due to the current recession. Additionally, gamers and analysts are beginning to ask what next console release will entail, implying that demand has decreased for the console.

VISION:
“Bringing People Together “

MISSION:
“Nintendo makes the high quality, innovative and unique gaming products and provides related services available worldwide”.

Business Objectives: * Improving the profit and sales * Enforcing customer relation * Increasing efficiency

Marketing Objectives: * Attracting different customers * Better targeting and positioning * Designing its products extremely virtual.

SWOT ANALYSES:
Strengths
* Brand reputation and recognition – unlike its primary competitors Nintendo is synonymous gaming * Established brand gives a competitive advantage - Nintendo’s long history of innovation has also given them an advantage. They can be trusted to try something new and to take risks. They are trusted to produce quality games and have a long and successful history of doing so. Finally, Nintendo only employs about 3000 people worldwide * Unique and innovative product offerings with largest games * Affordable gaming for people of a variety of economic classes - Their low cost of employment mixed with in house production and distribution of product keeps Nintendo’s cost low, and offers them a distinct price advantage over their other competitors. * Geographical diversification reduces the business risk – the distribution networks that are established across the world and has a truly global presence. It is not over reliant on any one of its markets, which helps Nintendo to reduce their risk abroad
Weaknesses
* Brand hasn’t established itself in the emerging economies * Limitations of enforcing intellectual property rights in some region has led to growth of counterfeit product * Nintendo’s lack of adequate marketing has left the serious gaming community unimpressed. Again, with the Nintendo Wii, it was largely unknown that it possessed online capabilities until after release. * Ignoring hard-core gamers Opportunities * Enhance Wi-Fi capabilities can help make inroads in the online gaming sphere - Nintendo has the opportunity to combine this trend for online gaming and demand for more products to go after the market segments that they have not tapped yet, as the market for online gaming is increasing. * Expanding demographics of gaming consumers * Technological innovations set to improve gaming experience * Increasing focus on third party software development will benefit Nintendo due to its relative simple technology and low development costs
Threat
* High competitive market * Lack of diversification outside the video games design field * High proportion of overseas sales has exposed the company to risk relating to fluctuation in foreign exchange rates. * Changing industry environment - as the customer preferences change rapidly and in order to maintain an advantage, before a new generation of consoles or games is released the next generation must already be in development

MARKETING MIX:
PRODUCTS
* NES (Nintendo Entertainment System) * SNES (Super Nintendo Entertainment System) * Nintendo 64 * Nintendo DS * Wii * Gameboy
PRICE
* Price are very affordable to its rivals * Sony most popular PS3 model was at the top with $599 * Nintendo became low-price leader with $250
PLACE
* Produced in Japan * Customers can download the games through Wii Shop Channel * Game publisher such as Electronic Arts Inc. have put more resources for the Wii * Independent shops are getting into action as Nintendo’s download channel.
PROMOTION
* Emphasized the family-friendly games * Offers games in its system * High-speed Internet that allows to playing certain online against friends and others.

PORTE’S FIVE FORCES 1. Intensity of Existing Rivalry * Large industry size, Large industries allow multiple firms and produces to prosper without having to steal market share from each other. Large industry size is a positive for Nintendo Large Industry Size (Nintendo) has a significant impact, so an analyst should put more weight into it. Large Industry Size (Nintendo) is an easily defendable qualitative factor, so competing institutions will have a difficult time overcoming it. This qualitative factor will lead to an increase in costs. * Low storage cost, when storage costs are low, competitors have a lower risk of having to unload their inventory all at once. Low storage costs are a positive for Nintendo. Low Storage Costs (Nintendo) has a significant impact, so an analyst should put more weight into it. Low Storage Costs (Nintendo) will have a long-term negative impact on this entity, which subtracts from the entity's value 2. Bargaining power of supplier * Inputs have little impact on costs, when inputs are not a big component of costs suppliers of those inputs have less bargaining power. Low cost inputs positively affect Nintendo. Inputs Have Little Impact On Costs (Nintendo) has a significant impact, so an analyst should put more weight into it. Inputs Have Little Impact On Costs (Nintendo) will have a long-term positive impact on this entity, which adds to its value. This qualitative factor will lead to a decrease in costs. Inputs Have Little Impact On Costs (Nintendo) is an easily defendable qualitative factor, so competing institutions will have a difficult time overcoming it. This statement will have a short-term negative impact on this entity, which subtracts from its value. 3. Bargaining power of customer * High Switching Costs has a significant impact, so an analyst should put more weight into it. High Switching Cost will have a long-term positive impact on this entity, which adds to its value. * Large number of customers, when there are large numbers of customers, no one customer tends to have bargaining leverage. Limited bargaining leverage helps Nintendo. Large Number Of Customers (Nintendo) has a significant impact, so an analyst should put more weight into it. Large Number Of Customers (Nintendo) will have a long-term positive impact on this entity, which adds to its value. This statement will have a short-term positive impact on this entity, which adds to its value.

4. The threat of new substitute * Limited number of substitute, a limited number of substitutes mean that customers cannot easily find other products or services that fulfill their needs. Limited substitutes are a positive for Nintendo. Limited Number Of Substitutes (Nintendo) is a difficult qualitative factor to overcome, so the investment will have to spend a lot of time trying to overcome this issue. 5. The threat of new entrants * Strong distribution network required, Weak distribution networks mean goods are more expensive to move around and some goods don’t get to the end customer. The expense of building a strong distribution network positively affects Nintendo. Strong Distribution Network Required (Nintendo) will have a long-term positive impact on this entity, which adds to its value. Strong Distribution Network Required (Nintendo) is an easily defendable qualitative factor, so competing institutions will have a difficult time overcoming it. Strong Distribution Network Required (Nintendo) is an easy qualitative factor to overcome, so the investment will not have to spend much time trying to overcome this issue. * Strong brand names are important if strong brands are critical to compete, then new competitors will have to improve their brand value in order to effectively compete. Strong brands positively affect Nintendo * Customer are loyal to existing brands, it takes time and money to build a brand. When companies need to spend resources building a brand, they have fewer resources to compete in the marketplace. These costs positively affect Nintendo. * High learning curve, when the learning curve is high, new competitors must spend time and money studying the market before they can effectively compete. High learning curves positively affect profits for Nintendo.

PESTLE ANALYSIS 1. Political Factor - target of political activist concerning controversy about violence in gamers. Entertainment Software Rating Board (ESRB) that assigns ratings for gaming content (ERSB, 2012). 2. Economic Factor, Purchasing behavior is influenced consumer purchasing power. Console development cycle follows roughly the general computer industry cycle, Consoles are not upgradeable customers have to buy complete new system. 3. Social Factor - video games played predominantly by young males. The current social trend on the rise non-gamers who have no prior experience or interest in video games. Numbers of female gamers are also on the rise. Digital downloads and in-game purchasing is gradually becoming the norm. 4. Technological Factor, Technology has improved processor speed, visuals and memory capacity for gaming consoles. Disruptive innovation in the form of smartphone and tablet has significantly altered consumer lifestyles. 5. Legal Factor, The legal issues faced by the industry are trademarks, copyrights, licensing, online ownership and demands of intellectual property. 6. Environmental factor, the video game industry uses a lot of plastic and metal resources for its hard ware. In the current era majority people are environmentally aware. Manufacturing game consoles creates non-biodegradable waste which is the byproduct of this industry.

STRATEGY
The strategy that Nintendo used is broad differentiation strategy as their generic competitive strategy. They are targeting the market of hardcore gamer, casual gamer and even someone who hasn’t play game before. The price of Nintendo is relatively much lower as compare to Sony and Microsoft.
Offensive: Blue Ocean – strategy to explore and create untapped elders/female and non hard-core gamer market. Always try to be the first mover to beat out competitor in existing market.
Defensive: be more innovative than competitor since they are getting into this area. (Wii Fit)

RECOMMENDATION * Invest more in R&D to create a proprietary and superior technology - Nintendo needs to take a step back from innovation. If they are going to recreate their successes they need to start emulating the things that made them successful to begin with. Clearly, being an innovator and a first mover use to work for them, but that’s no longer the case. Nintendo was known for producing the video gamer’s game. * Continue to approach new gaming experience - Nintendo is lack luster, falling behind on most fronts, and their consumer base has changed. They can still reconcile their situation by going back to basics. Creating games that gamers’ will care about. Stop focusing on the non-gamer market, instead focus on the splits between the aging gamer and the young gamer. Nintendo has the opportunity to bridge that gap by reintroducing their classic video games, reintroducing the term ‘Nintendo hard’ and marrying the old gamer who is nostalgic for the good old days, while filling the need of the young gamer who is looking for a challenge.