1.1 The Industry
Sony, originally known as the Tokyo Telecommunications Engineering Company, dates back over half a century ago to post war Japan in 1946. Sony has since used product innovation and stringent marketing strategies to achieve massive growth to become the world’s leading consumer electronics manufacturer. The Sony brand is directly involved and dedicated to the design and development, manufacture and sale of a wide range of electronic devices, equipment and instruments for consumer, industrial and professional markets (sony.co.uk). Sony UK has many manufacturing subsidiaries around Europe and the globe. Sony Europe operates three main European factories for production. These are situated in Barcelona Spain, Nitra Slovakia and Budapest Hungary. Additional to this, the Sony Corporation owns numerous factories around the world producing consumer electronics products for the global market. Sony UK are the market leaders in consumer electronics and currently own around 13% of the total AV/IT (Audio Visual and Information Technology) market. Sony’s nearest UK competitors are Samsung with a nearing 12.1% market share in February 2008, followed by Panasonic and Apple with 8.9% and 6.1% market share respectively. Sony UK’s turnover FY07, ending in March 2008, totalled £947m, resulting in a total annual market share of 15.5% with a total AV/IT market value of £6,109m. This is an annual increase of market share of 0.3% over FY06’s 15.2% (Appendix 1). Sony, over the years, has developed into a strong brand name with very high customer loyalty. There are a massive amount of consumers out there that only buy Sony products (Business Superbrands, 2005, p. 231). The AV market has become excessively more competitive over recent years with the substantial growth of competitors such as Samsung, Panasonic and Phillips to name a few.
2.0 Aims and Objectives
The aim of this project is to test the validity and reliability of Sony UK’s segmentation practices to reveal, if any, changes in Sony’s customer segments. 2.2 Objectives
1. To review the current literature surrounding the subject of market segmentation.
2. Analyse what Sony currently believe are their target segments.
3. Using new research, discover any changes or shifts in segmentation behaviour.
4. Conduct an in-depth analysis, contrast and compare new research with previous research.
5. Provide recommendations to future strategy and position. 2.3 Scope
1. Project is solely concerned with Sony’s segmentation of television (TV) customers.
2. Only concerned with Sony’s UK operations.
This is due to a majority 61% of Sony’s turnover is generated through TV and attributes of customers can dramatically change between product groups. Similarly, the attributes of customers can also change depending on the country and any assumptions that the segmentation will be the same globally will be false.
3.0 Literature Review
3.1 What is Market Segmentation?
Market segmentation is defined by McDonald and Dunbar (2004) as “the process of splitting customers, or potential customers, in a market into different groups, or segments” (McDonald & Dunbar, 2004, p.34). Wendell Smith introduced the term ‘Market Segmentation’ in 1956 and sees these “differences between groups of consumers to be opportunities in the market” (Raaij & Verhallen, 1994, p. 49). The identification of these groups allows companies to customise their marketing communications and results in a shift from “mass marketing towards a target marketing strategy where the focus is on a particular group of customers” (Kara & Kaynak, 1997, p. 873). This denotes that companies need to research their customers in order to recognise the different groups, or segments, that occupy their customer base. Kotler and Keller (2006), among other credible authors, state that a “marketer can rarely satisfy everyone in a market” (Kotler & Keller, 2006,...