Nintendo The Launch of Game Boy Color

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NintendoThe Launch of Game Boy Color

• Anna Montanana
• Rosemary Nocito
• Deena Vezo
• Maggie Wu

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Nintendo History

• 1889 Nintendo was founded by Fusajiro Yamauchi
  as a manufacturer of 'Hanafuda - Japanese
  playing cards.
• The name 'Nintendo' actually means 'leave luck to
  heaven
• 1970 first field of video entertainment after
  creating the Beam Gun with opto-electronics
• 1980 launched Game Watch which was an LCD
  based platform that had 59 games
• 1983 introduced first home console, Nintendo
  Entertainment System (NES)
• 1989 released Game Boy, a smaller portable
  version of Game Watch that had great potential
  in terms of graphics and interchangeable games

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Nintendo History

• Since the release of Game Boy, Nintendo has also
  introduced, Super Nintendo, Nintendo 64, and Game
  Boy Advance to the market
• 1997 it was estimated that more than 40 of U.S.
  households owned a Nintendo game system
• Nintendo is the worldwide leader in home gaming
  systems.

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Game Boy History

• 1989 Game Boy was initially released coupled
  with the addictive puzzle game Tetris for 169
• 1993 Original Game Boy was offered in various
  colors including, blue, yellow, and red
• 1993 Game Boy Pocket introduced to the market
• 1994 Super Game Boy was launched enabling gamers
  to play Game Boy games on TV through the Super
  Nintendo system
• 1996 Original Game Boy was released in a new and
  improved slimmer version
• 1997 Game Boy Pockets released in six new colors
• July 1998 expected launch of Game Boy camera and
  printer additions that will turn Game Boy into a
  digital camera with printable pictures and
  stickers
• November 23 1998 Anticipated launch of Game Boy
  color in North America and Europe

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SWOT
Strengths
Opportunities
Weaknesses
Threats
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Strengths
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Strengths

• Game Boy is the most successful gaming platform
  in history
• sold more than 70 million units during its almost
  10-year life
• Nintendo was the leader in the worldwide US15
  billion retail video game industry.
• Nintendo manufactured and marketed hardware and
  software for its game systems
• Nintendo 64 is named Time Magazines Machine of
  the Year for 1996.
• Control of the games that ran on its game
  machines, keeping its third-party software
  providers under tight control
• Improvements
• In 1994, an add-on for the Super Nintendo
  Entertainment System was launched, enabling
  gamers to play Game Boy games on that system.
• In 1996, Game Boy was relaunched in a slimmer
  housing with further improvements in screen
  clarity.
• In 1997, Game Boy Pocket was introduced in six
  new colors..
• The new Game Boy color would display sharp and
  vivid color graphics. Game Boy Colors screen
  was also not backlit, which meant two AA
  batteries would last about 12 hours.
• Nintendo Canada would have access to a broad
  selection of ads from the US that could appeal to
  all the target segments being considered for
  their launch plan.

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Weaknesses
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Weaknesses

• Both Game Boy hardware and software sales had
  declined steadily from 1992 to 1996 on a
  worldwide basis.
• By 1998, support of third-party developers for
  Game Boy was waning. Many viewed it as a spent
  force in the market and were reluctant to invest
  the US200,000 to US300,000 to develop a new
  Game Boy cartridge, when there were more
  attractive opportunities in the much larger
  console market.
• The marketing communications budget for Nintendo
  in Canada was only a small fraction of the
  Nintendo budget in the US. Also, Nintendo Canada
  selected its ads from the pool developed by
  Nintendo in the US.
• When the original Game Boy was launched in 1989,
  it had been priced slightly higher in Canada than
  the US, attributing to Game Boys proportionately
  greater sales in the US.

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Opportunities
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Opportunities

• On November 23, 1998, a color version of
  Nintendos Game Boy would be released
  simultaneously in North America and Europe, one
  of the most important launches in Nintendos
  history.
• Game Boy Camera and Game Boy Printer were
  scheduled to be released in July 1998.
• Retailers had open to buy dollars that could be
  shifted around during the year to support the
  hot products.
• Sega and other competitors lacked new exciting
  software for their handheld hardware. Handheld
  users seemed to want exciting, current software.
• Six new games, specifically developed to take
  advantage of the 56-color palette on Game Boy
  Color, were expected to be available at the
  launch date.

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Threats
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Threats

• In 1998 Nintendo began to lose momentum as some
  of the third-party developers began focusing more
  of their development effort on Sony Playstation,
  which was viewed as an easier platform on which
  to develop games, and the Sony business model was
  viewed as being a more profitable one.
• Sega had been much more aggressive in promoting
  its console business in Canada than in the US.
• Third-party developers were spending fewer
  marketing dollars in Canada due to the relatively
  small size of the Canadian market. Canada
  represented only about 3 percent of the global
  Game Boy software market, whereas the US
  accounted for between 35 percent to 40 percent.
• As sales velocity slowed in the mid to late
  1990s, retailers shifted more of their shelf
  space to Nintendo consoles and competing
  platforms and reduced their advertising and
  promotional support for Game Boy.
• In the late 1990s, a number of specialty stores
  had delisted Game Boy because they felt that they
  were not achieving competitive returns on their
  sales of Game Boy hardware and software.
• Competition
• Atari Lynx, the worlds first color handheld
  video game system.
• TurboExpress
• Segas Game Gear
• Segas Nomad

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Issue Identification

• Issue 1 Choosing the right target market and
  the right positioning
• Issue 2 Choosing the right market approach
• Issue 3 How to price Game Boy
• Color in Canada
• Issue 4 Product

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Issue 1 Target Market and Positioning

• Alternative 1 Focus on teens who were more
  likely to already own a Game Boy
• Alternative 2 Focus on new kid/tween users

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Issue 2 Marketing approach

• Alternative 1 In-store interactive display
• Alternative 2 Mall tour
• Alternative 3 Cross Canada tour

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Issue 3 Pricing

• Alternative 1 Price Game Boy Color according to
  the mid-1998 exchange rate conversion of U.S.
  price
• U.S. 79.95 Cdn 120
• Alternative 2 Price Game Boy Color at a lower
  cost of Cdn 100

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Issue 4 Product

• Alternative 1 Continue to offer the Black and
  White version of the product
• Alternative 2 Stop offering the black and white
  version Game Boy
• Alternative 3 Bundle a game cartridge with the
  Game Boy Color
• Alternative 4 Do not bundle a game cartridge
  with the Game Boy Color

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Group Discussions

• Issue 1 Choosing the right target market and
  the right positioning
• Issue 2 Choosing the right market approach
• Issue 3 How to price Game Boy
• Color in Canada
• Issue 4 Product

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Issue 1. TM and Positioning

• Alternative 1Focus on teens who were more
  likely to already own a Game Boy
• PROs
• If successful in getting teens to adopt, this
  might spur sales among kids and particularly
  tweens, who often aspired to use the same
  products as teens
• Teens tended to purchase machines with their own
  money, making their purchases all year round, not
  just at holiday times
• If teens already owned a Game Boy we know that
  they are interested in this type of handheld
  device, and we know how to target them because
  we have reached them in the past
• CONs
• If Nintendo Canada targeted teens that had used
  Game Boy in the past, they might view the Game
  Boy as a product that was great when they were
  younger but not sophisticated enough to meet
  their current gaming needs
• If Nintendo was unsuccessful in getting teens to
  adopt, then perhaps kids and tweens would avoid
  it as well
• Many in this segment already had a black and
  white Game Boy and a library of five or six games
  and viewed the product as old technology
• Many teens appeared to have moved past the
  handheld machines to consoles, which offered
  greater speed and game complexity
• Only represent 6.7 of the total population of
  Canada

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Issue 1 TM and Positioning

• Alternative 2 Focus on new kid/tween users
• PROs
• If Nintendo targeted kids and tweens and was able
  to convince kids/tween nonusers of Game Boy that
  Game Boy Color was a cool product, it could
  become a gotta have for the younger set
• This younger audience was less likely to already
  own a Game Boy product
• Kid/Tween users represent 19.9 of the total
  population of Canada
• CONs
• The difference between being cool or not cool
  with the younger set was a very fine line
• If focused on the kids and tweens, it might turn
  off the teens because Game Boy Color was a kids
  toy
• Game Boys were typically purchased for kids and
  tweens by their parents as gifts, resulting in
  peak sales occurring in November and December for
  holiday gift giving and in June as a graduation
  or great report card present

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Issue 2 Marketing approach

• Alternatives 1 low-cost interactive display
• Pros
• generate brand/product awareness when
  teens/kids/tweens visit the stores
• Estimated in store interactive displays would be
  used approximately 20 of store hours for an
  average of 3 min/use.
• No sales staff required to monitoring the
  displays ( easy to operate)
• 1000 potential outlets and Nintendo could achieve
  an 80 placement rate
• Low Cost
• Cons
• No one is there to explain the new product or the
  benefits of the product if kids/tweens/teens have
  questions
• Most sales clerks knew little about Game Boy
  Color hardware or software
• Competitors have similar displays ? Direct
  Competition

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Issue 2 Marketing approach

• Alternative 2 Mall Tours
• Pros
• Nintendo reprehensive is highly knowledgeable
  gamers, and would show game insights and tricks
  that kiosk visitor could use to improve their
  scores on popular games
• Incentives encourage trial among
  teens/tweens/kids ? Mall tour visitors can enter
  contests for Nintendo products and would receive
  a temporary Nintendo tattoo when they left
• 6-8 minutes on the product ( more than store
  displays which lasts only 3 minutes)
• Teens/kids/tweens spend a lot of time in the mall
• Cons
• Expensive 10,000 per Mall visit, means only 25
  mall tours per year
• Mall selection problems
• staff is limited/place is limited

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Issue 2 Marketing approach

• Alternative 3 Cross-Canada tour
• Pros
• Most likely to generate buzz/PR
• Automatically high awareness due to scale of the
  events
• More freedom to promote in a bold manner
• Bigger kiosks, more staff to promote the new
  product
• High reach due to the size of audiences attending
  each event ---80
• Cons
• costly 150,000 per year for major regional or
  national events CNE, Klondike Days, and the
  Calgary Stampede
• Events only take place in summer months

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Issue 3 Pricing

• Alternative 1 Price Game Boy Color according to
  the mid-1998 exchange rate conversion of U.S.
  price
• Pros
• Remain consistent with pricing in the US
• Nintendo Canada wouldnt experience
  proportionately lower sales than the US similar
  to when the original version had been launched in
  1989
• Prevent black market trafficking and sales from
  the US to Canada because of the cheaper price
• produce a retail margin of 20 on Game Boy
  consoles
• Cons
• Hardware price would be too high to drive-high
  volume sales in Canadian market
• Higher cost make it unaffordable for kids/tweens
  market
• Could lose business to competitors because of
  high cost of gaming system

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Issue 3 Pricing

• Alternative 2 Price Game Boy Color at a lower
  cost of Cdn 98
• Pros
• Lower price makes the gaming system more
  attractive and affordable to buy, especially for
  kids/tween market segment
• Retailers could make more profitable returns per
  square meter
• Lowest sale price of Game Boy to date
• Cons
• Could lead to black market exporting of product
  to other markets
• Nintendo Canada would only receive a gross margin
  of 5 instead of the past 6
• With a lower margin received from each Game Boy
  sold, retailers might chose to spend their money
  on carrying and aggressively marketing other game
  systems

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Issue 4 Product

• Alternative 1 continue to offer the black and
  white version of the product
• Pros
• Low price ? Cdn 49
• Backward compatibility of game boy color games
  mean that consumers could buy the black and white
  version and then trade up at a later date with
  out making their games obsoletes.
• Cons
• With the low price, the black and white version
  would not generate any profits
• Cannibalizing sales of Game Boy color

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Issue 4 Product

• Alternative 2 do not continue to offer the
  black and white version of the product
• Pros
• Avoid losing money producing the black an white
  version
• Avoid cannibalizing sales of Game Boy color
• Cons
• Excludes consumers looking for a more affordable
  option

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Issue 4 Product

• Alternative 3 Nintendo Canada should bundle a
  game cartridge with Game Boy color at Launch
• Pros
• Incentive to purchase
• Teens/Tweens/Kids can see the difference between
  color and black and white gamesand if they think
  color is superior, they would keep purchasing the
  color games instead of just keep using their
  old/already owned black and white games
• History could repeat itself with Game Boy having
  the same success it experienced when packaging
  Tetris with the original Game Boy
• Increased perceived value of game system
• Cons
• A high price will be charge??
• Lose revenue from independent game sales

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Issue 4 Product

• Alternative 4 Nintendo Canada should not
  bundle a game cartridge with Game Boy color at
  launch
• Pros
• Avoid higher retail prices
• Higher profits from the individual game sales
• Cons
• Less incentive to buy
• Consumers may expect Game Boy to come with a game
  cartridge because that is what they have
  experienced in the past

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Recommendations

• Focus on both teens already own a Game Boy and
  new kid/tween users
• The best marketing approach is a cross-Canada
  tour because we felt this is the best way to
  generate buzz and increase brand awareness and
  same time it is the most informative way to
  educate users on the new product. We also felt
  the other two approaches can be carried along
  after the launch of Game Boy Color
• PR
• we also recommended what has been stated in the
  case
• Sales Reps visit leading magazine/web
  publications three month before product launch
  and let the writers to play the game for 5-6
  hours
• We decided to price Game Boy Color at Cdn 120 to
  best satisfy factors such as profitability,
  consumer price sensibility and sufficient
  motivation for retailers to carry the product.
• Lastly, we have decided that Nintendo should stop
  offering the black and white version Game Boy and
  bundle a game cartridge with Game Boy Color.
  This will not only encourage users to try new
  Game Boy Color but also make them adopt to the
  new product faster.

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Expert Choice

• See printouts

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Implementations

• short-term
• focus advertisements and literature on the 120
  price, which includes a game cartridge, and
  towards both teen and new kid/tween user markets
• begin research and creation of the cross-canada
  tour
• gather information about consumer response and
  satisifaction
• advertise aggressively in the beginning to
  promote the new Game Boy Color to both target
  markets with separate campaigns focused at each
  market individually
• long-term
• execute the cross-canada promotions tour
• sign a young celebrity as a spokesperson for Game
  Boy Color to appeal to the young target markets

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• Thank You