6.  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

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

8.  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

9.  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

10.  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

11.  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%)

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

13.  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

14.  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

15.  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

16.  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

17.  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”

18. 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 Production10.372.110.240.83.4 Penetration20.630.92.50.571.43.4 Market Development 4.51.3530.961.23.50.74.15 Product Development 20.661.840.830.63.8 Diversification – Kids 20.641.26.51.31.50.33.4 Diversification – Adults 1.50.4561.871.420.44.05

19.  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