Background & Situation Analysis of Sony-Ericsson

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Sony Ericsson Background and Situation analysis

Ever since the Japanese electronics company Sony and the Swedish telecom giant Ericsson came together to form Sony Ericsson, big things were expected in terms of technologically advanced wireless phones as well as improved sales and market shares. However, the first year passed with a lot of disappointment. Sony Ericsson’s already low market shares began to drop rapidly and the company was losing money. On the other hand, the much anticipated Sony Ericsson T68i phone was introduced and was a major hit. It was the first GSM/GPRS (global system for mobile communications/general packet radio service) color screen handset. Its Bluetooth technology was also the first of its kind, allowing wireless connections to headsets and PC synchronization. One of the accessories included a snap-on digital camera, which has become quite popular and a must for all new models. In the past year, Sony Ericsson has seen a revival in the company as they continue to introduce new revolutionary devices such as the P800 and T610 and set new standards. All this success has contributed to an increase in market shares and has pushed them back into the top five in cell phone manufacturers. In order to continue this success, a new IMC plan is needed. The first step will be to analyze the marketing situation and conducting a SWOT analysis.

Situation analysis

External factors:
Consumer behaviour analysis - Buyers tend to be wealthier individuals who are willing to pay more for a better phone. They have higher expectations than those who are first time buyers. Sony Ericsson is creating new ways to use multimedia communications, which creates new business opportunities. Christmas time is usually when sales volumes increase.

Economic trends - According to IDC's Worldwide Handset QView, worldwide handset shipments grew by 19.2% year-over-year in 2Q03 and increased sequentially by 6.7% to 118.3 million units despite world economic uncertainty, the treat of SARS and terrorism.

Market analysis: Currently the market size for cell phone users in Canada is C$7-billion in 2002 and will grow to C$10.8-billion in 2007. While in the United States over the next five years the cell phone market will reach US$133 billion. Currently the market segment for cell phones are, regular cell phone users, colour screen cell phone users, and a new market of cell phone gamers.

Product analysis: Market share are at 5.7% currently #5 behind Nokia, Motorola, Samsung and Siemens. Units shipped in the quarter reached 6.7 million, which is 34% higher year-on-year and 23% higher compared to the first quarter 2003. Net sales for the quarter were Euro 1.125 million, representing year-on-year and sequential increases of 18% and 40%, respectively.

Competitive analysis:
Direct competitors - Nokia, Motorola, Samsung, Siemens
Indirect competitors – walkie-talkies, instant messaging, pagers, PDA’s

SWOT analysis

Strengths: The strengths of this company include its relationships in Japan (Sony) and Europe (Ericsson). Sony also provides expertise in the consumer electronics field while Ericsson supplies their knowledge in telecommunications. The handheld devices that they make are the best with all the latest features. They are currently working on G3 (Third Generation) phones. Many of the latest Sony Ericsson models have appeared in hit movies because of their stylish designs thus giving it extra exposure. All of their models are GSM world phones, which can be used all over the world. There is also a wide selection of accessories that can be used with their phones.

Weaknesses: The costs of most Sony Ericsson phones are quite costly but the phones are classier compared to the Nokia brand. This issue does not help considering they have very little market shares when compared to the leader Nokia. While most people are impressed with the design and advanced phones, many have no use for a...
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