THE SONY AIBO

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THE SONY AIBO

• Marguerite Chaignot, Wai Ting Chung, Adrian
  Corsin,
• Samer Fahmy, Johnny Leon

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FAMOUS DOGS IN HISTORY
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AIBO WEBSITES
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AIBO TOWN MAGAZINE
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AIBO SOCKS
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The Problem

• American market less responsive in purchasing
  AIBO when compared to Japanese market
• Problems
• The product remains unprofitable for Sony at
  current production levels
• Possible Causes
• High price tag
• American consumer sees robots as dangerous or
  threatening and see little value in a robotic
  pet that performs no functional tasks

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AGENDA

• The Problem
• Situational Analysis
• Methodology and Criteria
• The Alternatives
• Alternative Selection
• Implementation

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Situational Analysis

• Strengths
• Association of Sony brand name
• Sony is market leader AIBO is the first
  commercially available robot
• Weaknesses
• Not part of Sonys core competencies
• electronic, games, and entertainment
• Price tag of US1500-2500
• Sony often fails to meet demand

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Situational Analysis

• Opportunities
• Social Baby boomers in the US market
• Technological The research holds the potential
  of being extremely valuable to external high tech
  companies
• Political Government agencies have a keen
  interest in how new technology can improve its
  operations
• Turn the robotic pet into a learning tool at
  schools or an automated caretaker at aging homes

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Situational Analysis

• Threats
• Competitors Honda's Asimo uses a platform
  recognition and network integration technologies
  similar to the AIBO
• Technological A high-tech company such as Sony
  and its competitors are always threatened by a
  high rate of technological obsolescence
• Economic By the nature of the product categories
  in which they compete, Sony and its industry
  offers many high-end, luxury products

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Methodology and Criteria

• Four criteria were used to compare the
  alternatives
• 1) Short term to medium-term profitability (30)
• 2) Alliance with Sonys core competencies (30)
• 3) Long term growth potential (20)
• 4) Ease of implementation (20)

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Alternatives

• Stop Production
• Reasons
• Sony AIBO is unprofitable
• Does not fit with core product strategy
• American market has a history of associating
  robots with enemies

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Alternatives

• Market Penetration
• The Innovator market has not be saturated
• Same product, same price
• Same Distribution channels
• The promotional strategy would eschew mass
  advertising and focus on building word of mouth
  buzz
• Technology trade fairs

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Alternatives

• Market Development
• Attract the early adaptors and lead towards a
  mass marketFunctional AND emotional positioning
• Build primary demand
• Market is large and will offer long-term growth
• Short-term profitability because low RD

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Alternatives

• Product Development
• Exploit the tech-savvy, innovator market that it
  currently targeted
• Develop the AIBO to the point of being less of a
  continuous innovation and more like a
  discontinuous one
• Purchase because of the novelty

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Alternatives

• Diversification
• Two diversification strategies
• a) diversification towards a highly functional
  AIBO which performs duties and is targeted
  towards adults
• Development of a highly functional product that
  answers the question, But what does it do?
• American consumer is pragmatic
• Low short-term profits
• Most aligned with Sonys core competencies of
  producing high-tech electronics

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Alternatives

• b) a primitive-version AIBO that is geared
  towards children
• Dropping both the price and the functionality
• Mass advertising campaign,
• Integrated components
• Element of luck when attempting to create mass
  infatuation

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Alternative Selection
Short Term to Medium Term Profitability Short Term to Medium Term Profitability Alliance with Sonys core Competency Alliance with Sonys core Competency Long Term Growth Potential Long Term Growth Potential Ease of Implementation Ease of Implementation Total
Weighting Weighting Weighting Weighting Weighting Weighting Weighting Weighting
30 30 30 30 20 20 20 20 100
Stop Production 1 0.3 7 2.1 1 0.2 4 0.8 3.4
Penetration 2 0.6 3 0.9 2.5 0.5 7 1.4 3.4
Market Development 4.5 1.35 3 0.9 6 1.2 3.5 0.7 4.15
Product Development 2 0.6 6 1.8 4 0.8 3 0.6 3.8
Diversification Kids 2 0.6 4 1.2 6.5 1.3 1.5 0.3 3.4
Diversification Adults 1.5 0.45 6 1.8 7 1.4 2 0.4 4.05
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Implementation

• Spend around 3M on national advertising campaign
• The advertising budget will be split into a
  40-60, respectively.
• Fifteen percent of the 40 will be spent towards
  TV commercial
• 10 will be spent on movie ads in high-tech
  movies
• 15 will be put towards advertisements in
  different newspapers, magazines, and other
  publications
• The remaining 60 of the budget will be spent on
  direct selling through booths in high-traffic,
  public areas, such as shopping centers and
  in-store displays/personnel at Sony and The
  Sharper Image Stores across the country

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Implementation