Case Analysis - Microsoft Zune/Bell Canada/Chrysler

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MICROSOFT ZUNE

As Microsoft ventures into new markets, the Zune will definitely have an uphill battle in order to establish a significant market position. The portable media player industry is one which is dominated by iPod's monopoly, and saturated with second rate competitors; such as th ironically names iRiver, and Toshiba's Gigabeat. All have been struggling to attain any market share under Apple's prevailing shadow. Microsoft's major problem in this market is the dominance of the apple brand which has become synonymous with portable music entertainment. The company will need to capture a considerable market share in order for consumers to recognize the media player as purchase worthy. Already having been adopted by innovators in the market, it is now up to Microsoft to push the product onto early adopters with hopes that the product is accepted by all consumer segments. Furthermore, the company needs to enlarge the market potential which at the moment, is restricted by 2 major factors: 1 – Awareness: With iPod's first mover advantage, reinforced by its effective marketing efforts, Apple has captured a large majority of market potential. While the Zune is a new product in the introductory stages of the product life cycle, consumers are lacking product and brand awareness and do not fully comprehend the benefits of the product. 2- Ability to Use: Since the iPod interface has been adopted by most, Zune's target market lacks the ability to use, and therefore comprehend the product benefits. Microsoft must therefore increase the ability for consumer trials before purchase, in order to promote its interface which has gotten positive reviews. It is obvious that Microsoft, like all other prospective iPod contestants, has taken a competitor oriented approach. The company is using benchmarking in all aspects of operations, from product design, to pricing and distribution. Using a competitor reactive market based pricing system; the retail value of the Zune is exactly comparable to that of its most prominent substitute. This allows for the perceived value of the product to be on par with Apple's 30g iPod while still offering more advanced and impressive features. Microsoft has successfully dissected the value added features of Apple's iPod, replicated them, and added specific product attributes with improved quality and technological capabilities. This approach has proven successful as Zune's unique features which have been approved by tech gurus (most importantly its wi-fi potential), will allow the company to differentiate the product in a dominated marketplace. When entering a new market, it is crucial for integrated marketing communications strategies to properly display brand values and product features. Microsoft has launched several campaigns with a "$100 million campaign to promote Zune with as a major theme"(Solman, 2006). However, Microsoft has failed to promote its most influential product features. These features include Wi-fi sharing, FM tuner, better interface technology, unique design, larger display screen. Unlike the iPod, Zune also allows consumers to customize backgrounds, another subtle aspect where the company has tried to deliver added value to the end consumer.

Recommendations:
In order for Microsoft to establish a significant position in the portable media player market, it is imperative that the corporation change its approach. An offensive strategic market plan is recommended as the Zune is only in the beginning of the product life cycle. As a plethora of internet blogs and product reviews have already insinuated, Microsoft should first begin by finding legitimate solutions to consumer concerns. Plainly, the Zune must become considerate of consumer needs by allowing unrestricted sharing ability, full compatibility (with Mac OS software and programs such as Napster, MSN music), and most importantly, larger music variety from the Zune Marketplace. Only then will the product have no limitations...
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