Last updated: May 28, 2019
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Sony LCD Division

 

 

1.                  Introduction

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The development of computer technology encourages engineers to integrate it in every design pf products including consumers’ electronics. Basically, the invention relates to the development of faster speed, higher storage, capacity, multi tasking/services capability, attractive appearance, fancy designs, miniaturization, vivid color, and simplicity, to name a few.

The situation suggests that a producer of electronic equipments can focus on developing particular products in order to gain extensive market share and competitive advantage over rivals’ products.

One particular type of electronic innovation that shows significant demands within the past decade is flat-panel monitor like LCD (Liquid Crystal Display)-type monitor, replacing the old CRT (Cathode Ray Tube)-based models. In computer industry actually the use of flat-panel is not a brand new idea since laptop computers must use it although at the first stage, they use CSTN (Color Super-Twist Nematic) models. CSTN is a passive matrix LCD that developed by Sharp Electronics in 1990s. However, the adoption of the technology for television rises significantly just several years ago to challenge the expensive plasma technology.

In spite of technological advancement in Liquid Crystal Display (LCD), the increasing demands and use of flat-panel technology for desktop computers and television is also the results of suitable marketing strategy that creates demands successfully. This is true since marketing strategy plays important role in determining the success of products in a particular industry.

Concerning the LCD market, this paper will discuss about marketing plan for Sony LCD Division. It includes the elaboration of market segment, target market, marketing mix, and implementation and control. Furthermore, this paper will display Sony’s strategy of enhancing its performance particularly in the LCD segment. Together with an elaboration of the market condition, we can then assess whether the company will go far its LCD-division strategy.

Sony is known as a worldwide manufacturer of numerous types of electronic items despite its considerable investment in other areas like insurance and movie production house. Recently the company has been suggested by its analysts to focus on its LCD segment because they believe in the existing opportunity within the segment. Other market observers however, stated that the market did not provide sufficient rooms for more investment in the LCD segment.

 

2.                  Marketing Plan

2.1.            Marketing Audit (current situation)

According to research by iSuppli, the raising demands for LCD-type monitor both for television and computer monitor purpose has driven the increase supply for LCD monitor. The research company estimates that in 2009, the number of LCD-TV will surpass the number of CRT (EMSnow, 2007).

There are a number of reasons that underlie the estimation. First, the raising demands have driven the LCD manufacturers to increase production capacity and thus reach the economies of scale faster. Second, the demands also bring sown costs of production and thus falling retail price of such LCD-TV or computer monitor.

 

Figure 1          Worldwide Television Factory Shipments by Display Technology

Source: EMSnow, 2007

 

At that time, according to iSuppli, LCD will take about 48-percent of market share of factory shipments while CRTs will have reduced market share into 42-percent of market share. The significant difference of market share will happen one year later in 2010 where LCD-Television will gain 56 of market share while CRT will only have 34-percent of market share (EMSnow, 2007). Figure 1 exhibits the historical data of television market share by display technology.

Table 1            Estimated Market Share of LCD-TV Panel Suppliers

Q1 06 Rank
Supplier
Q1 06 Shipments (000)
Q1 06 Market Share
Q4 05 Shipments (000)
Q4 05 Market Share
1
LG.Philips LCD
2,353
22.26%
2,219
22.37%
2
Samsung
2,115
20.01%
2,125
21.43%
3
CMO (Chi Mei)
1,979
18.72%
1,870
18.86%
4
AU Optronics
1,775
16.79%
1,493
15.05%
5
Sharp
1,470
13.90%
1,505
15.17%
6
Quanta
385
3.64%
360
3.63%
7
CPT
320
3.03%
200
2.02%
8
BOE-Hydis
105
0.99%
95
0.96%
9
Hannstar
50
0.47%
50
0.50%
10
SVA-NEC
20
0.19%

0.00%

Grand Total
10,572
100.00%
9,918
100.00%
Source: EMSnow, 2007

 

In many details, the market share of LCD products by manufacturer, LG Philips LCD (LPL) still becomes the market leader in the first quarter of 22.26% of market share in term of shipments. The number represents about more than 2.4 million of LCD panels in first quarter of 2006 (EMSnow, 2007).

Other LCD manufacturers that has significant market share are Samsung, CMO, and AUO in which they hold 20-percent, 18.72-percent, and 16.79% of market shares in Q1-2006, consecutively. The reduced market share that Samsung experienced was because the company continued focusing on high-price and large-size liquid crystal display (LCD) segment (EMSnow, 2007).

Concerning market share of Sony LCD products, we find that the company still has low market share compared to their competitors form Korea. However, Sony gains its strong brand quickly by offering their LCD product line named Bravia. The company soon gains strong position when they introduce high-end products in LCD technology, Bravia 1080p, which the best-selling LCD in the market (EMSnow, 2007). Figure 2 shows the top 10 LCD-TV in an online electronic shop.

 

 

Figure 2          Top 10 of Plasma and LCD TV

Source: http://www.dtvcity.com/

 

Although, in the first quarter of 2006, Sony has not named as the largest manufacturer of LCD display, about one and half year later in Q3-2007, the company gains significant market share about 10.1 percent, an increase form 6-percent in the previous year. According to iSuppli, the top-six manufacturers of LCD display in 2007 are shown in Table 2.

 

Table 2            Top-Six Manufacturers of LCD Displays

Rank #
Manufacturers
Market Share
1
Vizio
13.0%
2
Samsung
12.8%
3
Sharp
12.0%
4
Sony
10.1%
5
Polaroid
9.1%
6
Philips
9.0%
Source: Krunker, 2007

 

2.2.            Marketing Plan (recommended situation)

In order to develop marketing plan for the future of Sony LCD product lines, the company must assess what benefits that LCD technology offers the customers. Therefore, it is necessary to explore the technology and then assess which feature that Sony can embed in their LCD products like Bravia.

Technically, a thin and flat liquid crystal display (LCD) is a product that resulted from several processes that happened at color or monochrome pixels. Those pixels are located in the front of a light source or reflector (Figure 4).

The increasing use of LCD is not only supported by consumers but also by engineers who design it since LCD is particularly suitable for equipments that has very small amounts of electric power or those using battery-powered equipments like PDA (personal digital assistant) or laptop computers.

 

(a) Principles of LCD

(b) A sub pixel of a color LCD
Figure 3          Principle of LCD (Liquid Crystal Display)

 

2.2.1.       Marketing Objectives

Concerning the Sony LCD Division, below is the marketing plan for Sony LCD Division as following:

·         Increase market share from 10.1 percent in 2007 into 16 percent in 2008 and 24 percent in 2009.

Year-to-year Growth of 58% in the 2008 and 50% in 2009.
Maintain strong brand fro Sony Bravia product line in LCD market
2.2.2.       Market Segmentation

Segmentation divides the market into smaller segments with similar characteristics, allowing us to treat each segment differently by giving them different products, prices and other marketing tools. This activity is important in a heterogeneous consumer market (Perner, n.d.).

For example, there are two general type of high-end television product: LCD and Plasma TV. These two products can be separated into two segments of market: high and middle classes segment. Plasma TV represents market segment that demands high quality products, prestige, and high-end products with sophisticated technology at any costs. This kind of segment tends to buy product that give them added values in addition to product capability.

The second segment is LCD TV, which represents middle class customers. This type of customers stands between customers of Plasma TV and regular flat-monitored TV. Therefore, customers of LCD TV are one that wants a higher value and prestige than flat TV but cannot afford to buy Plasma TV.

 

2.2.3.       Targeted Segments

Brand of Products                 : Crystal-clear display
Customers’ Preferences         : People who concern about quality of television
·                                                                                                         Ages  :  Above 25 (this is the age where people buy a product

Based on rational reason for quality products)

Income Levels                       : above $6,500 per month
2.3.            Marketing Mix (current and recommended)

2.3.1.       Product Mix

2.3.1.1.Product Details

In order to elaborate the product strategy of Sony’s LCD division, it would be a good idea to describe how the company develop its latest product. The latest product of Sony in its LCD segment is the Bravia series. These new series definitely prove Sony’s commitment to conquer the LCD TV market to recover from Sony’s latest financial issues.

The series are called Bravia which stands for ‘Best Resolution Audio Visual Integrated Architecture’. It is the next highly promoted brand by Sony since the well known Wega series. The Bravia series comprise of the premium flagship V-series, S-series and B-series. All the Bravia series currently have a screen size ranging from 15 to 40 inches but Sony is aiming toward increasing the size up to 50 inches (Yang, 2004).

 

2.3.1.2.Collaborations

Sony performed a joint venture deal with Samsung to produce even more LCD series in the years to come. Managers of the company stated that Sony has increased its LCD television production to meet the demands of customers, moreover, using the 7th generation panels that would be preferable to consumers. Observers believed that with the enhanced level of sales, the LCD television will meet the value for money ideal. Standard prices on the Bravia series range from US$ 571 to US $ 3,816. The product has a high definition display with screen resolution of 1,366 x 768 in the V and S series. The product also offers enhanced color reproduction which is provided by the WGG-CFCL system, an offering that is considered making the Bravia series different from other brands.

Another feature is the improved surround sound quality. The designer of the models are committed in perfecting the theatre experience by providing the great display qualities mentioned earlier by an SRS TruSurround audio capabilities which allowed users to enjoy virtual surround sound by using only two onboard speakers. The product is also equipped with an automatic light sensor which function is to optimize the picture intensity according to the brightness of the surrounding environment. The Bravia series are also equipped with a picture to picture system that allows users to watch multiple TV shows side by side in one and the same TV screen.

Management of Sony Corp. has revealed its intention of providing consumers with what they will want in the forthcoming digital boom. Sony’s market research team have performed an intensive research and invest a considerable amount of money before designing the parts for its LCD screens. This is in-line with the previous statement of Sony’s management that the company needs to have a good hold of the LCD division in order to become the digital powerhouse (Yang, 2004).

Nevertheless, experience revealed that Sony has quite a problem with its quality control department. In December 2003 the company recalled more than 10,000 units of 32-inch plasma TV model. The recall was due to a realized circuit problem that prevented the product from producing images without internally corrupting itself. The company’s initiative to overcome this problem is to let-in external assistance, in this case, from a well-known rival in the same market segment, Samsung Electronics in 2003. This rather drastic measures was considered necessary because Sony’s market research team identified that the LCD market is among the fastest growing segment today. The company aims to be the number one manufacturer in LCD TVs (Layne, 2005).

Sony’s market research division has even felt that they are being cheated that they never expected that flat-panel televisions will be as popular as they have. They are more determined to create a powerful foothold on the segment. The apparent efforts are:

·         Collaboration with Samsung Electronics which apparently cost $1 billion worth of an investment to facilitate the erection of an LCD panel plant in South Korea. The plant, which is already up and running now, allow the joint venture companies to produce about 350,000 32 inch LCD televisions. Recent reports even indicated that Sony plans t increase the amount of investment in the deal. Some said that this is the sign of a great commitment in being number one within the segment and others believed that Sony is simply trying to buy its way into covering its total investment with future profit.

·         Collaboration with other companies, like the one announced in 2005, between Sony and Idemitsu Kosan the oil company to develop materials that will be used in organic LED (OLED) displays. Sony’s management stated that this collaboration is necessary because unlike the LED, OLED does no require a backlight, which would allow the LCDs to be made even with thinner screens.

(Kabza, 2005)

 

2.3.1.3.True Market Potentials

If Sony and its market research team were convinced that the LCD market that was growing is going to continue in this pace for the next decade, other market observers and analysts stated that the LCD market might have already been overwhelmed by the abundant supply and decreasing demands.

Recent research indicated that electronic companies like Sony, Samsung and Sharp have an increase in the amount of LCD inventories because of the decreasing demand in recent years. Apparently, this is caused by the overestimated growth potentials made several years previously, when Sony’s experts said that the LCD market will grow above 50% annually (‘Is LCD Market’, 2006. LCD Market, 2007).

This might have been the truth in the previous years; however, experience researchers are familiar with the term that if something grows above 50% than it is bound to get worse soon. This is what apparently occurred, leaving Sony, Samsung and Sharp wondering if their inventories are going to be sold within their time estimations, while other analysts said that they have gone beyond existing market capacity (‘Is LCD Market’, 2006. LCD Market, 2007).

 

2.3.2.       Pricing

As the product becomes more widely distributed among the modern society, the prices of LCD TVs are bound to decrease gradually. In 2006 alone, LCD TV prices decrease 25%. This price reduction is expected to continue in at least the similar rate for several years to come.

Nevertheless, Sony and its Bravia series are confident that their price tags are representative of the value given by their products. Bravia series are sold for a variety of prices. The cheapest one had a price tag of US$ 571.96 with 15 inch screen, 4:3 aspect ratio, 640 x 480 and weigh about 4.3 kg. The 20 inch LCD TV was priced US$ 762.82. The most expensive one is a 40 inch LCD TV with 16:9 aspect ratio; 1,366 x 768 resolution; WEGA engine, 178 degree viewing angle, 3D noise reduction and weigh about 27.2 kg.

There is no record of any discriminatory pricing strategy performed by Sony with the Bravia series because the prices are announced at the internet for the wide society to see (‘Latest Pricing, 2007).

 

2.3.3.       Distribution

Sony plans to deliver a higher number of growth in 2007 by focusing on six areas which are: DVD recorders, PCs, home servers, cell phones, digital still cameras and flat panel displays or LCD. In terms of distribution however, there are no announcement regarding a strategic change or realignment. Thus, I believe that Sony will remain on its current distribution strategy even with the Bravia series.

Sony is famous for its ability in marketing electronic products worldwide and even to third world countries. Analysts stated that the trick is actually by letting locals decide for themselves what they are going to do with Sony’s products. In other words, Sony prefers to perform deals with local distributors which has more knowledge of the market and let them perform their strategic moves. This philosophy is based on the understanding that each market has their own character which Sony’s managers would never understand personally. Relying on local market research and local partners, Sony market its products aggressively in developed and developing countries. Using this strategy, Sony has been able to reach as far as Africa and the Southeast Asia and gain recognition for their products.

In terms of costs, analysts calculated that teaming-up with local distributors in developing countries are actually cheaper than establishing a valid subsidiary within the region. This way, the local partners are partially responsible for Sony’s investment within the region and Sony gains their insights on how to get the attention of local markets and how to deal with local issues.

 

2.3.4.       Promotion

Promotion of LCD TV basically must work hand-in-hand with retailer. This condition highlights the pricing method that Sony will provide in which the company will provide great discount that but their products in large quantity. In addition to this initiative, Sony LCD division must develop promotion strategy that entice customers to take a look at Sony product and further convinced to buy them.

In order to do so, there are five technological terms that the company must integrate in any Sony promotion media (at television, billboard, brochures etcetera) as following:

 

2.3.4.1.                     Resolution.

Unlike CRT technology in traditional television, LCD TV has special feature to provide the best display effect. The feature is resolution. To decide the best resolution is not merely the highest number but to assess the picture quality. For example, we can assess the color contrast when viewing dark scenes or we can examine whether during fast motion action the scenes are corrupted (Kelkoo Electronics, 2007).

 

2.3.4.2.                     Viewable Size

Like CRT technology, LCD TV also appears in several sizes, called viewable size that represents the diagonal lengths of LCD screen. The different is KCD TV is likely to have wider size like 26” and 27” while CRT TV usually appear in exact format like 14”, 21”, 25”, 29”, and 33” (Kelkoo Electronics, 2007).  For example, Figure 1 has screen size 32”.

 

2.3.4.3.                     Type of Matrix.

In general, there are two type of matrix that LCD panel has; they are passive and active matrix. Passive matrix like CSTN and DSTN common used in 1980s for laptop monitor panel. Meanwhile, LCD TV uses advanced technology, active matrix that also called TFT (Thin Film Transistor). The benefits of using TFT technology is the screen can present clearer picture compared to passive-matrix models (Kelkoo Electronics, 2007).

 

2.3.4.4.                     Color supports

Color supports determine the number of color that LCD TV supports. For PDA (Personal Digital Assistant) purposes, TFT-based LCD panel usually support 256K (256,000) color). Meanwhile, the latest LCD TV support multi millions colors tat make the picture resemble the reality.

 

2.3.4.5.                     Aspect Ratio

In LCD TV industry, Aspect ratio plays important role for customers when deciding an LCD TV. The ratio describes the capability to stretch and to enlarge image. The notion underlies the need to obtain real picture although sometimes it may appear distorted. Most LCD TV usually has 16:9 although there is still LCD TV that uses 4:3 ratios (Kelkoo Electronics, 2007).

 

2.4.            Implementation and Control

No
Communication

Activities
PIC (Persons in charge)
Time Schedule
Measure for Evaluation/Control
1
Customer Gathering (Product Presentation and Retention Program)
Production Dept.
Every Exhibition/Trade shows
§  The number of Audiences at the Customer Gathering (minimum 50 people per seminar-day)

§  Participants/Audience Feedbacks on product improvement

§  Post-seminar Sales Record/Achievement
3
Visiting Universities (Looking for talents and conducting research agreement)
R&D Dept.
On every Career Days
5
Press Release
Marketing Dept.
Every news events
News Distributed into Media
6
Website Updates
IT Dept
Daily
Web sites updated once a changes/new activities occur
7
Year end Sale 30% off regular price)
Marketing Dept.
Yearly
Hard selling during festivals reach target
 

Reference:

 

EMSnow. (2007). iSuppli raises LCD-TV panel forecast and predicts LCD-TV market leadership in 2009. Retrieved December 1, 2007 from http://www.emsnow.com/newsarchives/archivedetails.cfm?ID=13338

Is LCD Market Overcapacity Being Reined In? (2006). Seeking Alpha. Retrieved December 1, 2007 from seekingalpha.com/article/ 14697-is-lcd-market-overcapacity-being-reined-in

Kabza. K.B. (2005). Sony Still Trying to Meet Demand For LCD Panels, Has Twofold Strategy. Retrieved December 1, 2007 from www.digitalcamerainfo.com/content/ Sony-Still-Trying-to-Meet-Demand-For-LCD-Panels-Has-Twofold-Strategy-.htm

Kelkoo Electronics. (2007). LCD TV. Retrieved December 1, 2007 from http://www.kelkoo.co.uk/b/a/co_1864_100311823-lcd-tv-buyers-guide-expert-advice-on-lcd-televisions.html

Krunker. (2007). Vizio remains leader in LCD sales. Retrieved November 30, 2007 from http://www.krunker.com/category/video/televisions/lcd-televisions/

LCD Market Expectations Too High Going Into the Holiday Season. (2007). Seeking Alpha. Retrieved December 1, 2007 from www.seekingalpha.com/article/ 18097-lcd-market-expectations-too-high-going-into-the-holiday-season

Latest pricing for Sony’s Bravia LCD TV. (2007). CNET Networks. Retrieved December 1, 2007 from asia.cnet.com/reviews/home_av/ tvs/0,39037594,39252757,00.htm

Layne, Nathan. (2005). Sony May Invest More in Samsung LCD Venture. PC Magazine. Retrieved December 1, 2007 from findarticles.com/p/articles/ mi_zdpcm/is_200509/ai_n15615580

Yang, John. (2004). A savvy Strategy for Sony. Retrieved December 1, 2007 from www.businessweek.com/bwdaily/ dnflash/may2004/nf2004055_1784.htm

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