Nintendo is a multinational video game company headquartered in Japan. It is involved in the business of developing video games as well as consoles. It immediately gained global recognition with the Donkey Kong release in 1981 and the Super Mario Bros (Dong and Mangiron, 2018, p. 150). Four years later. Since that time, the brand has produced some successful consoles in the industry, for example, the Super Nintendo Entertainment System, Game Boy, the Wii as well as the Switch. In addition to partners like HAL Laboratory, there are numerous subsidiaries in the headquarter nation and overseas.
In its current marketing strategy, Nintendo uses various theories such as segmentation, force field analysis, competitor analysis and differentiation. A product such as Nintendo Switch or DS has utilized various approaches to segmentation, particularly demographic. Individuals ranging from the age of fifteen years and thirty-five years who enjoy playing video games are the most targeted. Apart from age groups, the business also aims for persons who casually like the games but are not actual gamers.
At the start of the century when virtual games initially entered the Chinese market, there were no particular regulations or laws available to administrators in the government. This is especially when dealing with the operation and publication of this new cultural item. Nowadays, the situation is somehow different whereby the administration and supervision of games is conducted by more than a single governmental department. This may be attributed largely to the various understandings of their departmental responsibilities. Support for the regulation of video games sometimes has been connected to moral panic.
Governments have established or enacted laws that control distribution via censorship based on banning or content rating systems. After almost fourteen years, the ban was however lifted in 2014 (Zheng and Chan, 2014, p. 20). Nevertheless, the Chinese would still regulate and determine which video games are hostile to the nation or do not conform to the outlook of the government (Dong and Mangiron, 2018, p. 152). The head of the country’s ministry of culture stated that they plan to lessen restrictions but still be able to monitor.
Censoring video games in China usually relates to harsh perceptions of history, war and the ruling authority. Multiple games have been prohibited in the nation for such reasons. For instance, the Hearts of Iron in 2004 was forbidden as the above-mentioned ministry discovered it to portray World War II in a distorted manner (Zou and Yu, 2020, p. 690). The paper has focused on the brand, new market and how the company can enter the Chinese market. For instance, it is recommended that Nintendo uses intermediaries to avoid risks that may arise as a result of conducting commercial activities for the first time in a different place. Additionally, it is suggested that the firm develops a pricing policy that will dictate the prices.
Background Information and Analysis of Nintendo
Nintendo is among the top companies in the video games industry and has main offices in Japan. A craftsman named Fusajiro in 1889 founded the organization as Nintendo Karuta. After venturing into different lines of business in the 60s and acquisition of legal status, the firm distributed he first console in 1977 (Melikuziev, 2020). It is widely known for its quality products which are unique and innovative. It has as well created various franchises such as the The Legend of Zelda, Metroid, Pokemon, and Fire Emblem. Its dominance and success can be seen by how much recognition it has received through awards from the Emmy Awards for Technology and Engineering, British Academy Games Wards and Game Developers Choice Awards.
Brand Resonance Prism
Brand resonance is a phrase that describes the relationship that exists between a customer with a product and how the former can relate to it. It can as well mean the intensity of a consumer’s mental connection with a brand and the randomness to remember a particular item in various consumption circumstances. Since its founding in 1889, Nintendo has opened many subsidiaries and produced various products that have been accepted worldwide (Melikuziev, 2020). The company has developed an image for individuals and customers know and comprehend what to which the firm is committed. They are familiar with the tasks and goods of the organization that the latter has avoided spending much on marketing recently.
In recent times, the company unveiled a new console named Nintendo Switch which is an improvement to another model called NX. An individual can immediately notice the uniqueness in this model as it resembles a handheld and a conventional home console. Gamers across various platforms even now, are excited due to the new and peculiar features of this product and much third-party game developer support. The organization is not a stranger to innovative and unique strategies that help in differentiating them from their competitors. Beginning from the playing cards, via the SNES 8-bit and 16-bit age, to the 3DS and currently the Switch, the business approach had captivated the attention of the top firms in the Western world.
With multiple games using narration methods with many choices and effects, terms for emotional reactions among users are extensively utilized in the sector. However, at the same time, words such as sympathy and pity are usually involved and confused with empathy (Abe, 2019, p. 150). The responses in the industry are perceived as indicators of good story writing and thus, desired. Nevertheless, games with mechanics explicitly based on that are rare.
CBBE Model
The CBBE model is an approach that is utilized to indicate how the success of a brand can be attributed directly to the consumer attitudes with regards to the brand. The Nintendo Switch, within the first ten months on the market, had more sales than the Wii U in a four-year life cycle. Various analysts in the gaming industry claimed that performance of the latter was the major factor (Gong and Hassink, 2019, p. 1010). This focused on how marketing programs promoted familiar software and another tablet controller whereas little screen time or data was provided concerning the console. Multiple customers admit that they thought the Wii U to be a tablet peripheral for the initial Nintendo Wii (Jin and Hurd, 2018, p. 75). This causes issues in terms of the level to which market intelligence obtained from participative audiences was used (Kang and Pang, 2022, p. 100537). However, concerns about the quality of the console did less to undermine the image of the games produced by Nintendo.
Current Strategy
In its current marketing strategy, Nintendo uses various theories such as segmentation, force field analysis, competitor analysis and differentiation. A product such as Nintendo Switch or DS has utilized various approaches to segmentation, particularly demographic (Li et al., 2019, p. 135). Individuals ranging from the age of fifteen years and thirty-five years who enjoy playing video games are the most targeted. Apart from age groups, the business also aims for persons who casually like the games but are not actual gamers. Force field analysis is another approach that the brand has taken to study the market, satisfy consumers and improve on sales (Komiya and Nakamura, 2019, p. 109). In order to conduct this process, a company has to describe its plan in the middle of a paper. Afterwards, it lists every of the force supporting change in a column on the left and those acting against change on the right (Luoma et al., 2018, p. 1400). The factors are given a score and the total on all columns determined. For instance, since the plan is entering into the Chinese market after the ban on video games was removed, this could be a technique that would tell whether or not the proposal is ideal.
China Appraisal
Support for the regulation of video games sometimes has been connected to moral panic. Governments have established or enacted laws that control distribution via censorship based on banning or content rating systems (Zhang and Chiu, 2019, p. 1). David Gauntelett in 2005 claimed that news headlines, grant funding as well as professional prestige more commonly approach authors who promote anti-media views. Lori Bergen, Tom Grimes and James Anderson reiterated the same statement in a 2008 writing that examined the sociological impact on the production of media effects study. In 2000, the consoles were prohibited in Mainland China (Dong and Mangiron, 2018, p. 150). After almost fourteen years, the ban was however lifted in 2014.
Nevertheless, the Chinese would still regulate and determine which video games are hostile to the nation or do not conform to the outlook of the government. The head of the country’s ministry of culture stated that they plan to open the window a crack to get a little fresh air but still require blocking mosquitoes and flies. Censoring video games in China usually relates to harsh perceptions of history, war and the ruling authority. Multiple games have been prohibited in the nation for such reasons. For instance, the Hearts of Iron in 2004 was forbidden as the above-mentioned ministry discovered it to portray World War II in a distorted manner (Dong and Mangiron, 2018, p. 152). In 2013, Battlefield 4 was banned by the same ministry with claims of misrepresentation of the country and an attempt to ruin its reputation (Dong and Mangiron, 2018, p. 153). Additionally, chat in video games faces even more or harsher restrictions. For example, Genshin Impact game bans swear terms and other words such as Putin, Falun Gong, Hong, Taiwan, and Kong.
PESTLE and Five Forces Analysis of Nintendo
Nintendo contains the five forces and PESTLE, which analyses its overall branding strategies. Nintendo’s PESTLE Analysis examines its business strategies and examines how political, financial, social, and technical (PEST) aspects and legal and environmental factors affect its company.
Political factors
Nintendo is an official Japanese video game console manufacturer. Nintendo’s devices are known around the globe for being high-performance consoles with cutting-edge technology. However, because it is an international company, it must consider the political circumstances in each location (Komiya and Nakamura, 2019). Political stability has been required to establish consistent laws that do not alter regularly. Political considerations include both political and non-political pressure groups.
Economic factors
Nintendo earns 80% of its revenue from sales outside of Japan. The interest rate across multiple countries influences the cost of raw materials. Several young people buy high-end systems with private loans, and when interest rates increase, sales suffer greatly (Komiya and Nakamura, 2019). Additionally, even as the public’s earning capacity grows, their disposable income increases.
Social factors
People’s discretionary income has increased significantly during the last decade. Individual lifestyles have shifted dramatically due to this increase in disposable cash. For children, gaming has become a luxury, and they need to play this on the finest consoles available, with the most up-to-date technologies. The widespread use of cell phones has further penetrated their merchandise. Video games are no longer thought of as games that can only be played today at home.
Legal factors
Many copyright infringements plague the gaming market. The videogame industrial sector has a robust legal staff to ensure that technology develops smoothly and that newly discovered findings are protected and patented. If the companies lack careful analysis and protection steps, they might be prosecuted for improper use of other companies’ technology (Komiya and Nakamura, 2019). Nintendo, for instance, has indeed been accused by Maryland’s Hillcrest Laboratories, which claims Nintendo has infringed on its patents.
Technological factors
In the gaming sector, technology is the most efficient tool that drives it. The innovations are constantly changing, and there exist progression in how the players interact well with games or theme. Each gaming platform is becoming a reality and console (Komiya and Nakamura, 2019). The gaming industry wants to provide its customers with the finest in line and the most realistic experience possible. Nintendo has thrived by focusing on developing technology throughout time.
Environmental factors
The rules regulating the environmental impacts of all manufacturing organizations, primarily in textile, iron, and even gaming industries, have gotten more stringent. This effect has more to deal with raising awareness about the importance of sustainability being a worldwide aim (Komiya and Nakamura, 2019). The manufacturing of gaming elements has a significant negative impact on the environment.
When we use Porter’s generalized five forces model to analyze Nintendo, we get the following results below.
Rivalry
Two other rivals must be regarded seriously by Nintendo since they pose a threat to the company. Because the well-known “big three” control the industry, the market structure is exceptionally high. Clients can swap items because they sell similar things at similar pricing (Zhang and Hjorth, 2019). The sector is likewise growing steadily, and people are venturing into this type of game business. Based on these data, we may conclude that rivalry-based competition is fierce.
Threats posed by substitute items
Substitute products pose a significant threat to Nintendo as a company. However, a Nintendo might not be identical to a PlayStation; the two gadgets serve the same objective (Zhang and Hjorth, 2019). Due to the apparent intense competition, the existing “big three” will continuously work to provide the greatest technology with the most features that will outperform all other gadgets.
Threats posed by new entrants
Since three powerful brands already control the business, the barriers to entry posed by newcomers are relatively high. Further, to put it another way, substantial capital expenditures for marketing and branding will get required to keep up in line with the existing big three giants and take a piece of existing market dominance.
Bargaining powers of customers and suppliers
There are numerous individual clients but only three significant-quality sellers, implying that consumers’ bargaining powers are limited. On the other hand, customers can quickly change platforms and push for something different (Zhang and Hjorth, 2019). Only Sony, Microsoft, and Philips appear mentioned as vendors, whereby Sony and Microsoft are already developing their platforms. As a result, Philips wields a significant amount of leverage over Nintendo due to the scarcity of alternatives.
Entry Strategy
The global strategy that Nintendo will need to use to enter into the Chinese market includes exporting, intermediaries, hierarchical and segment mechanisms. The first approach refers to promoting the products which are the video games in the country an organization desires to sell them, that is, China (Nguyen, 2020). Some brands utilize direct exporting whereby they sell their goods or services in foreign markets without involvement of third-parties (Pan, Choi and Meng, 2019, p. 69). Businesses that are in the line of selling luxurious items or have done that in other markets before, usually opt for this technique.
Companies may as well indirectly export by utilizing an agent’s services, for example, global distributor. Such individuals can be referred to as intermediaries (Komiya and Nakamura, 2019, p. 110). It is wise for someone who is trading in a new market for the first time to use one as it eliminates risks involved (Jääskö, 2018). Through language, cultural, legal, and business knowledge into a target market, global trade intermediaries have the ability to remove the struggle associated with export. In case a firm needs business guidance on entering a particular market or logistics on the supply chain, these individuals act as the export section of the brand (Peng, 2020, p.20). Even though Nintendo will have to pay for such services, this approach leads to a return on investment since the agents have information on what is needed to be done to succeed.
Tactics
Pricing is an important of ensuring that consumers in a particular area purchase a product that is new to the market. By setting the prices to be too high, a brand immediately discourages many people from being interested in buying (Simpson, 2019, p. 525). Learning about the marketing’s purchasing power should inform whether the standards ought to be high, low or average. In a country with more low-income earners, it is wise if the products or services sold do not cost much. In addition to this, setting very low prices as well might be damaging for a brand’s image or perception (Pan, Choi and Meng, 2019, p. 71). In business, quality is associated with costs and thus, significantly low prices suggest that a particular item in the market will not satisfy fully the need of the customer (Tien et al., 2020, p. 25). It is, therefore, essential to study the consumer buying behavior and purchasing power.
Distribution
Distribution is an aspect in business that can determine loyalty from customers. Individuals want to partake products or services from a company that is reliant. For instance, it is difficult for people to trust a brand that cannot deliver on time. In the game industry, there are many firms that are competing for the top spot in the market share (Wu et al., 2018). Sony and Microsoft are some of the best and are even doing great in the Asian markets including China. The updates and upgrades on consoles are routine and aimed to reach their clients before another brand releases their own (Zhang and Hjorth, 2019, p. 810). Nintendo would do great if it can guarantee a better way to assess needs for improvement on their games and deliver updates.
Promotion
Advertising is an important part of entering or reaching new market. The video games consumers in China prefer brands that they know or have seen their promotions (Jääskö, 2018). This is similar to other areas around the world as it is difficult for someone to purchase a product from one that they do not recognize (Zhao and Lin, 2021, p. 15). Marketing an item through various techniques ensures that a brand is distinguished from the rest and thus it can be easier to find new customers. Since the ban regarding the video games censorship was lifted, it is the right moment to infiltrate the market and dominate with advanced technological innovation in the field of gaming.
Strategy Implementation
The first step for Nintendo to take is searching for intermediaries that will ensure they are able to export the video games into the Chinese market. The individuals selected should be international distributors who have worked in the Asian markets and understand the culture and behaviors of the locals. This is essential since they can aid in conducting the PEST analysis of the country in which the company is intending to start business. As suggested throughout the paper, it is vital to understand the type of market in which one is venturing. There are places that do not allow foreign organizations to prosper as much as the local firms. Governments can accomplish this by enacting laws and regulations that are harsh on the former than the latter. Having an intermediary enables a company to have information they cannot obtain by themselves.
There are many risks that are involved with trading in a new market for the first time. Some businesses have failed in their first year of doing business internationally (Jääskö, 2018). As much as it can be attributed to market analysis, the main issue that all those brands failed to acknowledge is that they needed someone in the countries they intended to conduct commercial activities. An intermediary offer data on the current status of the economy and the market. The information can be helpful in determining whether time is right to invest in a business venture. In the event Nintendo will need guidance on logistics, the intermediaries will act as the export section of the brand. Even though the company will spend money for the services, this approach will lead to a return on investment. Apart from the market analysis information, data on issues such as language preference on products by consumers can be key in drawing attention to the goods.
After understanding how to conduct exports, Nintendo will then be expected to establish a pricing policy that will seek to obtain and retain consumers. As suggested earlier, pricing is critical in ensuring that consumer in a particular area purchases a product that is new to the market. By setting the prices to be too high, Nintendo might immediately discourage many Chinese locals from being interested in consuming the video games consoles. Learning about the marketing’s purchasing power from the intermediaries should inform whether the standards ought to be high, low or average. China is a country that is doing well economically and thus, the same prices offered in other developed countries should apply. Setting very low prices would suggest to the people that the consoles are of low quality which is bad for business.
Conclusion
The paper reveals that until 2014, China had a ban on video games especially from foreign companies. Support for the regulation of video games sometimes has been connected to moral panic. Governments have established or enacted laws that control distribution via censorship based on banning or content rating systems. Even after the lift, it is believed that the Chinese still regulate and determine which video games are hostile to the nation or do not conform to the outlook of the government. Censorship of video games in the country has related to harsh perceptions of history, war and the ruling authority. Multiple games, including the Hearts of Iron, have been prohibited in the nation for such reasons.
For a company such as Nintendo, the Chinese market is important since the country’s population is great and grows at a faster rate than that of many other parts. In addition to the economy doing exceptional, marketing experts claim that the consumers are more willing to spend on quality products. Since its founding in 1889, Nintendo has opened many subsidiaries and produced various products that have been accepted worldwide. The company has developed an image for individuals and customers know and comprehend what to which the firm is committed.
The consumers are familiar with the tasks and goods of the organization that the latter has avoided spending much on marketing recently. In its marketing strategy, the paper shows that the brand has applied various theories, for example, segmentation, force field analysis, competitor analysis and differentiation. A product such as Nintendo Switch or DS has utilized various approaches to segmentation, particularly demographic. Individuals ranging from the age of fifteen years and thirty-five years who enjoy playing video games are the most targeted. Apart from age groups, the business also aims for persons who casually like the games but are not actual gamers. Apart from that, the new strategy suggests a concept of utilizing intermediaries. Other top organizations have used it before since it aids in alleviating the risks involved.
Reference List
Abe, Y. (2019) Japanese market entry strategy. The case of Yamanouchi Pharmaceuticals in Western Europe. In The Internationalization of Japanese Business (pp. 150-155). Routledge.
Calvelli, A. and Cannavale, C. (2019) Market entry strategy. In Internationalizing Firms (pp. 59-110). Palgrave Macmillan, Cham.
Cruz, R. (2022) The modern economics of the video games industry. University of Miami. Web.
Dong, L. and Mangiron, C. (2018) ‘Journey to the East: cultural adaptation of video games for the Chinese market’, The Journal of Specialised Translation, 29, pp. 149-168.
Gong, H. and Hassink, R. (2019) ‘Developing the Shanghai online games industry: a multi‐scalar institutional perspective’, Growth and Change, 50(3), pp. 1006-1025.
Jääskö, H. (2018) Search engine optimization when entering a new market.
Jin, H. and Hurd, F. (2018) ‘Exploring the impact of digital platforms on SME internationalization: New Zealand SMEs use of the Alibaba platform for Chinese market entry’, Journal of Asia-Pacific Business, 19(2), pp. 72-95.
Kang, X. and Pang, H. (2022) ‘City selection for fresh produce e-commerce’s market entry strategy: based on the perspective of urban logistics competitiveness’, Transportation Research Interdisciplinary Perspectives, 13, p. 100537.
Komiya, N. and Nakamura, J. (2019) ‘A study of factors enhancing the success of casinos entering into new market—toward marketing strategy considering ones’ experience of casinos’, Journal of Strategic Management Studies, 10(2), pp. 109-121.
Li, G., Zhang, X., Chiu, S.M., Liu, M. and Sethi, S.P. (2019) ‘Online market entry and channel sharing strategy with direct selling diseconomies in the sharing economy era’, International Journal of Production Economics, 218, pp. 135-147.
Luoma, J., Falk, T., Totzek, D., Tikkanen, H. and Mrozek, A. (2018) ‘Big splash, no waves? Cognitive mechanisms driving incumbent firms’ responses to low‐price market entry strategies’, Strategic Management Journal, 39(5), pp. 1388-1410.
Melikuziev, S. (2020) Strategic marketing analysis for entering a new market with an innovative technology in the drilling industry (Doctoral dissertation, Politecnico di Torino).
Ming-Tak Chew, M. and Wang, Y. (2021) ‘How propagames work as a part of digital authoritarianism: an analysis of a popular Chinese propagame’, Media, Culture & Society, 43(8), pp. 1431-1448.
Nguyen, C. (2020) Market entry strategy to the Finnish market. Case company: Klimato.
Pan, Y., Choi, C.Y. and Meng, Z. (2019) ‘Research on the development of One IP (intellectual property) animation & game in Chinese Market’, International Journal of Internet, Broadcasting and Communication, 11(2), pp. 67-75.
Peng, A.Y. (2020) Social transformation and digital cultures in the post-reform era. In A Feminist Reading of China’s Digital Public Sphere (pp. 17-37). Palgrave Pivot, Cham.
Simon, J.P. (2018) Triggering the emergence of digital ecosystems: the role of mobile and video games in emerging economies. Digital Policy, Regulation and Governance.
Simpson, T. (2019) ‘LIVE Baccarat calculations: Macau machine gambling and the production of the post-socialist subject.’, Journal of Cultural Economy, 12(6), pp. 521-538.
Tien, N.H., Dana, L.P., Jose, R.J.S., Van Dat, N. and Duc, P.M. (2020) ‘Analysis of McDonalds’ entry strategy into Vietnam market’, International Journal of Advanced Research and Development, 5(3), pp. 23-29. Web.
Wu, X., Zha, Y., Li, L. and Yu, Y. (2022) Market entry strategy in the presence of market spillovers and efficiency differentiation. Naval Research Logistics (NRL).
Zhang, J. and Chiu, C.L. (2020) The impact of game censorship and regulations on foreign game consoles in China. 2020 13th CMI Conference on Cybersecurity and Privacy (CMI) – Digital Transformation – Potentials and Challenges(51275).
Zhang, G. and Hjorth, L. (2019) ‘Live-streaming, games and politics of gender performance: the case of Nüzhubo in China’, Convergence, 25(5-6), pp. 807-825.
Zhao, Y. and Lin, Z. (2021) ‘Umbrella platform of Tencent eSports industry in China’, Journal of Cultural Economy, 14(1), pp. 9-25.
Zheng, J. and Chan, R. (2014) ‘The impact of ‘creative industry clusters’ on cultural and creative industry development in Shanghai’, City, Culture and Society, 5(1), pp. 9-22.
Zou, L. and Yu, C. (2020) ‘The evolving market entry strategy: a comparative study of Southwest and JetBlue’, Transportation Research Part A: Policy and Practice, 132, pp. 682-695.