Background Nintendo is a B2C video game company that develops and markets both video game consoles and video games. They have been building a strong video game brand since 1977 and recently released a new and more active video game system called the Wii in 2006 to compete against Sony`s Playstation 3 (PS3) and Microsoft's Xbox 360. The Wii was a great success and had much of its success attributed to marketing (Datamonitor, 2010). The Wii has had strong performance in North America, and will be analyzed in this report by using the concept of societal marketing, 4p marketing mix framework and the implications of both. Societal Marketing In society, marketing has managed to retain the stale image of "an empiricist seeking in any situation to devise a profitable pattern or formula of marketing operations" (Anderson and Taylor, 1995). Societal marketing is a concept that opposes this image by advocating inclusions of "long-run consumer welfare" in the marking concept. This concept is based on the assumption that consumers can't make a distinction between their short term desires and their long term needs. However, there are critiques of this theory that point out that corporations shouldn't be responsible for deciding what is best for consumers morally or societally (Crane and Desmond, 2002; Prothero, 1990). Nonetheless, preservation of the environment and staying active and healthy are all parts of societal marketing and are also desired by many consumers in today's market place. In today's society "Goods and services cannot be produced without considering any damage such production will have on the environment" (Prothero, 1990). Marketing Mix The marketing mix is an assemblage of marketing tools that are arranged into four categories: product, price, place and promotion. These four categories or Ps are used by organizations to achieve its marketing goals for the target market of a particular product or service (Kotler, 2002). The four p marketing mix framework was made available by Jerome McCarthy in 1960 when he released Basic Marketing: A Managerial Approach (Anderson and Taylor, 1995). For marketing strategists, this framework is a trusted and highly used method for implementing the marketing mix. Nonetheless, the four p's have been an accepted marketing paradigm for over 50 years and some authors think that this paradigm is old and needs shifting. The main drawback of the four Ps is its complete focus on internal factors, while excluding external (i.e. customer) factors (Constantinides, 2006). There are many other frameworks published by authors that try to compete with the 4p's by trying to improve on its lack of customer focus and other limitations. Many of those frameworks are not as intensive and exegetic as the four p's and are essentially viewed as inadequate and supplementary at best. Additionally, alternative frameworks and criticisms fail to account for the fact that the "customer has been the focus in McCarthy's 4p paradigm" (Anderson and Taylor, 1995). Target Market Nintendo decided to diverge from traditional video game customers of 18-34 year old males by switching their primary target market to non-gamers. The different target market for the Wii is known as the chief household officer (CHO). The CHO is a mother between the ages of 35 and 49 who works full time and runs a household and are essentially ``housewives who run a house the way they would run a business – strategically and balancing budgets`` (Williams, 2009). In addition to balancing the budget, the CHO also decides what her household does for recreation (Charleson, 2008). This change in Nintendo`s target market was spurred by the "blue ocean strategy". The "blue ocean strategy" switches a company's focus from the red ocean of direct competition to the blue ocean of "creating demand in new places where there is none" (O'Gorman, 2008). The product, price, promotion and place of the Wii are all tailored to this new target market. Product Product is "a good or service... which affords a bundle of benefits, both objective (Physical) and subjective (Image) to a user" (McCarthy and Perreault, 1993). The Wii can be considered a speciality product and theory states that speciality products are an important purchase for consumers due to their strong desire for the product. Customers purchase a speciality product with great infrequency and go to great lengths and exhaust additional exertion when evaluating a speciality product (McCarthy and Perreault, 1993). Even though the Wii is in the speciality product class, it is still affected by the product life-cycle. McCarthy and Perreault (1993) state that "the product life cycle describes the stages a new product idea goes through from beginning to end". Traditionally the product life cycle of a video game console ends quickly because of extensive and continual technical improvements made to video game consoles (Clements and Ohashi, 2005). Nintendo took a different route by using inexpensive commonplace parts when building the Wii and choosing to differentiate instead of engage in an "arms race" with their competition. This prolonged the life cycle of the Wii by avoiding Commoditization (O'Brien and Tkaczyk, 2007). McCarthy and Perreault (1993) also articulate that "customers buy satisfaction, not parts" and a product should be at the core of the marketing concept. Some factors that make up the product aspect of the marketing mix are design, quality, features and packaging (Kotler and Armstrong, 2010; Waterschoot and Van den Bulte, 1992). Designing a quality product with customer wants and needs in mind contributes to an increase in sales (Kotler and Rath, 1984; Bruce and Daly, 2007 cited in, Lindahl and Nordin, 2010). However, it has also been proposed that explicit consumer desires should not influence internal design methods used to conceptualize a differentiated product. This way of thinking was conceptualized from the mentality that creative design could be compromised by sagacious demands of consumers (DigerfeldtMånsson, 2009; Fillis, 2006; Beverland, 2005 cited in Lindahl and Nordin, 2010). Additionally, having design features that present benefits that meet desires that are ubiquitous in the marketplace and leaving out features that are unnecessary is an excellent way to increase standardization and capture a mass market (Johnson and Myatt, 2006). The Wii design has a balance between standardization and meeting market desires. White was the only colour option offered, which increased standardization and appealed to the target market because it is a sleek neutral colour that creates a sense of space and represents "purity" and "happiness" (Aslam, 2006). After three years, Nintendo made the colour black available as a purchase option in an effort to reinvigorate the life cycle of the product (Nintendo, 2009) and it is the only design change made since its launch. Among other things, Nintendo also designed the Wii to be "no larger than 2 or 3 stacked DVD cases" and "inconspicuous when placed around the living room TV" (Takamoto, 2006) in order to fit into the target market's lifestyle. Even the Wii controller remains inconspicuous, by taking its design cues from a common TV remote. The quality of the Wii's design is demonstrated by its lower failure rate (Thorsen, 2009) and its "ability to satisfy a customer's needs and requirements" without extraneous, unneeded features (McCarthy and Perreault, 1993). Features of the Wii are limited in comparison to its rivals, which have "blisteringly fast chips, graphics, and cutting edge disk technology". The Wii also lacks the ability to play DVDS because it was deemed an unnecessary feature seeing as most consumers already have a DVD player and Nintendo didn't want to compete with products that it didn't have to (IGN, 2006). The main differentiating feature of the Wii is its motion controller which "often requires no button manipulation whatsoever" (O'Brien and Tkaczyk, 2007). This feature gives the Wii the benefit of being able to play unique games that are accessible to the target market; "the console itself does not have any value apart from facilitating the use of software" (Clements and Ohashi, 2005). Unique video games such as "Brain Age and Wii Fit are getting people to revaluate the role of video games in society. And are attuned to shifting societal values" (Wesley, 2010). This feature is beneficial for society and for the target market; because it shifts the affiliation video games have with deleterious consequences such as weight gain and destructive behaviour. In addition to that, variety and uniqueness of games on the Wii help extend its product life cycle. Packaging design communicates and refers back to a company's brand when at the point of sale and an article in packaging digest even states that "No initiative is more important in the marketing mix than packaging" (Rethink, repackage, reconnect', 2008). Packaging has a combination of different attributes such as "signature color", "graphics", "typography" and a "distinctive logo" (Mininni, 2010) and these attributes are executed on the Wii package. The Wii package design is uncluttered and clean with white used as the signature colour in order to appeal to the target market. The inside of the packaging is designed with societal marketing in mind. The Wii is packaged using corrugated cardboard, instead of traditional Styrofoam packing. Although this option is more expensive, it is much better for the environment due to its recyclability (Ngilen, 2006). There has been evidence that companies with environmentally friendly packaging show increase in sales and market share due to raised consumer satisfaction, possibly generated by companies going above and beyond typical packaging requirements ('Cleaner & greener packaging adds up to marketing wins', 2003). As a component of the product, the packaging has a limited usage and the product quality is really what matters. Price Even though they are unique, speciality products, like the Wii aren't always priced at a premium and consumers have a low sensitivity to price (McCarthy and Perreault, 1993). Two factors that are part of the promotion aspect of the marketing mix are list price and discounts (Kotler and Armstrong, 2010; Waterschoot and Van den Bulte, 1992). A penetration pricing strategy was implemented for the Wii's list price when it was introduced to the market. The Wii was priced at $250 compared to the skimming list prices of $399 and $499 for Xbox 360 and PS3 respectively (Bremner, 2007). "Penetration pricing is a strategy in which the initial price is set relatively low in hopes to "penetrate" the market quickly and secure a significant market share" (Liu, 2010) while dropping the price at a slower rate than competitors (Liu, 2010) see figure 1. Nintendo pursued a penetration pricing strategy, not only because their production costs were lower than competitors' (Bremner, 2007), but because there is a ``mutually enhancing feedback loop between hardware and software`` (Liu, 2010) in the video game market. A video game console developer can enter with a low penetrating price in order to sell more games and attract more game developers (Liu, 2010). Also, high game production and game availability is excellent for extending the life cycle of a video game console because, the more games available for the console leads to a "higher willingness to pay for hardware later in the cycle" (Clements and Ohashi, 2005). The Wii pricing strategy is illuminated further by the fact that, as of 2011 the Wii list price has only been discounted 20% since its launch, whereas the Xbox 360 and PS3 have been discounted 33% and 40 % respectively. The Wii has always been relatively inexpensive when compared to current gaming consoles and this makes purchasing it less of a financial burden and the product more accessible to a wider market. This helps the long term welfare of the primary target market because it provides a recreational experience that doesn't greatly affect the household budget. Figure 1 (McCarthy and Perreault, 1993)- Modified by Author Promotion Consumers understand that a system is only as good as its games. In a way, the games sell the system. Most forms of Wii promotion include a respective game in order to demonstrate the abilities of the Wii. Promotion is "the offer of an inducement to purchase, over and above the intrinsic value or price of a good or service" (McCarthy and Perreault, 1993). Some factors that make up the promotion aspect of the marketing mix are advertising, public relations and sales promotion (Kotler and Armstrong, 2010; Waterschoot and Van den Bulte, 1992). Advertising "is any paid form of non-personal presentation of ideas, goods or services by an identified sponsor" (McCarthy and Perreault, 1993) and advertising for the Wii system can be categorized as competitive advertising. Strong (1925) stated that the AIDA concept can be used in conjunction with advertising in order to: get attention, hold interest, arouse desire and obtain action. A single TV commercial was produced by Nintendo (2006) for the Wii system during the launch of the Wii, which can be examined using the AIDA concept. The commercial begins by displaying a smart car as a way to get attention because viewers would be intrigued by its unique appearance due to its limited availability in North America (Llanos, 2004). Next, the target market is shown in the commercial having fun and spending time with her family. This would definitely hold the interest of moms, who are the primary purchaser. The unique selling proposition (USP) of the Wii is a new, different and more active way to play video games. The USP was shown by demonstrating the pre-packaged game that came with the Wii, called Wii Sports, in order to build desire. However, while Nintendo does an excellent job of keeping their target market watching the advertisement and building a desire for the product, the commercial doesn't have a call to action. Public relations (PR/publicity) "is any unpaid form of non-personal presentation of ideas, goods or services" (McCarthy and Perreault, 1993). Public relations has two primary concerns, firstly to handle animadversion and preserve an organization's amicableness during exigent circumstances. Secondly to demit nationalistic criticism of a foreign organization by developing and improving its corporate appearance (Lee and Carter, 2009). Public relations can be regarded negatively due to the fact that the public perceives it as a method of clouding authentic facts and stymieing the democratic process of deciding on a purchase (Moloney, 2009). However, if done properly, public relations can be viewed as more genuine than advertising due to the advocacy by an unbiased observer (Daglish, 2001). Even though Nintendo has a favourable image in North America, it needed PR to overcome the foreign nature of its new product in order to convert non-gamers into customers. Nintendo leveraged PR in this way when they created the Wii ambassador program, which was a program that enlisted members of the target market that were influencers (I.E Bloggers) before the Wii was launched. These moms would then host Wii parties and would invite peers over to play the Wii, thus converting them to purchasers and advocates of the Wii by word of mouth marketing. The program was run a short time after the launch of the Wii as well; however, currently there is no evidence of its continued implementation (Bulik, 2007). PR has also been a success in promoting the Wii in a societal sense. During the launch period, the Mayo clinic considered it a tool in fighting the childhood obesity epidemic because of its ability to help burn calories in children (Schmidt, 2007). More recently the University of Toronto conducted a studying that shows how the Wii can rehabilitate stoke patients (Biospace, 2010). Sales Promotion is a sponsored activity "other than advertising, publicity or personal sellingthat stimulate interest, trial, or purchase by final customers or others in the channel" (McCarthy and Perreault, 1993). Sampling is a common method of sales promotion, however Loras Heck (2008), cautions against amassing too large a collection of samples because of the cost, and proposed that companies should only sample upon request (Heck, 2008). However, a sample of a Wii in certain retailers is cost effective because it can be used again and again in store. On top of that, offering a trial before purchase lowers a consumer's risk by raising certainty and lowering post purchase dissonance (Enright, 2005). Nintendo even implemented the "Wii Mall Experience", a promotional setup in malls in North America that had experienced agents demonstrate the Wii to patrons (Nintendo, 2006). Place Place is "concerned with all the decisions involved in getting the right product to the target market's place, a product reaches an end customer through a channel of distribution" (McCarthy and Perreault, 1993). Coverage and inventory are two factors to consider when planning place strategies (Kotler and Armstrong, 2010; Waterschoot and Van den Bulte, 1992). Distribution coverage for the Wii is intensive; Intensive distribution relates to selling a product through as many appropriate avenues as possible. For a mass-market speciality product like the Wii, this means a wide variety of retail locations ranging from department stores such as Sears, to online electronic retailers such as Gamestop.com (Nintendo, 2011). Calatone et al (1999) consider intensive distribution to be essential "in a society where instant gratification is becoming the norm" and presumes that making a product broadly and easily purchasable is integral in getting the product to the target market. However, intensive distribution creates a lack of control over retailers and can place the product next to competing products (Kotler, 2002: 241). Difficulty can arise when for an organization when determining just how intensive the distribution strategy for a product should be. If distribution is too widespread the "over saturation increases marketing costs without providing benefits" (Frazier and Lassar, 1996) and can result in damage to the product's image and competitive position. However, the distribution strategy for the Wii contradicts some of the basic theory for product distribution marketing. Anderson and Fein (1997) state that `convenience goods are associated with intensive distribution` and speciality goods are related to exclusive distribution. Inventory is a fundamental marketing activity that is focused entirely on having products promptly purchasable by consumers (Rosenbloom. 1987 cited in Anderson and Fein, 1997). However, even a year after the Wii was launched, supply couldn't meet demand from consumers and the Wii was scarce in the market place. Scarcity is and can also be used as a marketing technique that "can enhance value perception and purchase intent through associations of symbolic benefits, such as selfenhancement and uniqueness" (Couchen and San-san, 2006). Nintendo denies using this strategy, but Edwards (2007) claims that Nintendo kept "its hot product in short supply to build buzz" and prolong its product life cycle. Either way, monthly sales have changed from 403,600 in august 2007 (Bulik, 2007) to 465,800 in February 2010 (Brightman, 2010) which shows improvement to the product life cycle and an enhanced ability to meet consumer demand. Implications Nintendo's strong 4ps have driven worldwide Wii sales past 30 million and grown Nintendo's annual revenues from $5,152.9 million in 2005 to $18, 386.2 million in 2009 (Datamonitor, 2010). However, competitors are starting to copy the Wii's USP in order to negate its differentiation and steal market share by leveraging the new non-gamer market that Nintendo has tapped into through its marketing efforts. Microsoft has released the Kinect, a hands free control system for the Xbox 360 that is being backed by a $300 million marketing budget (Shearman, 2010). Sony has also released a new motion controller called the PS3 move that shares similarities to the Wii controller (Hernández, 2010). This has already resulted in a considerable boost for Sony (Newton, 2010) and Microsoft's (Dutton, 2011) competitive position in the video game market and poses a threat to Nintendo's long term sustainability. "If you've built your console on an innovative controller, you have to ask yourself, Is that long term?"(O'Brien and Tkaczyk, 2007). 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