 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

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

 Strengths: › Association of Sony brand name › Sony is market leader AIBO is the first commercially available robot  Weaknesses: › Not part of Sony’s core competencies  “electronic, games, and entertainment” › Price tag of US$1500-$2500 › Sony often fails to meet demand

 Opportunities: › Social: B aby 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

 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

 Four criteria were used to compare the alternatives › 1) Short term to medium-term profitability (30%) › 2) Alliance with Sony’s core competencies (30%) › 3) Long term growth potential (20%) › 4) Ease of implementation (20%)

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

 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

 Market Development › Attract the early adaptors and lead towards a mass market Functional AND emotional positioning › Build primary demand › Market is large and will offer long-term growth › Short-term profitability because low R&D

 Product Developmen t › 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

 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 Sony’s core competencies of producing high-tech electronics

 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”

Short Term to Medium Term Profitability Alliance with Sony’s core Competency Long Term Growth Potential Ease of Implementation Total Weighting 30% 20% 100% Stop Production Penetration Market Development Product Development Diversification – Kids Diversification – Adults

 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