Marketing Paper

Executive Summary

This report provides an analysis and evaluation of the current and prospective marketing plan of the Xbox 360. Methods of analysis include marketing objectives, target market areas, a marketing mix and an overview of the product, which all can be found in the Table of Contents section of this report. The report finds that the prospects of the company can greatly increase if it is done right.

The Xbox 360 is the second video game console that has been produced by Microsoft. The 360 succeeds Xbox, which competes with Sony's Playstation III and Nintendo's Wii. Xbox Live allows gamers to compete live online and also allows customers to download arcade games, television shows and music videos. To date, over 13 million units have been sold worldwide, which is more than either of its competitors.

The 360 was first released in 2005. The 360 began production only 3 months before retail release. Because of the short timeframe, Microsoft was not able to supply enough systems initial consumer demands in the U.S. and Europe. The lack of supply caused the 360 to sell in bundles on Ebay for inflated prices. Forty thousand units appeared on EBay on the first week of release, which was 10% of total supply.

Despite sales figures, Microsoft's gaming division is losing money. At the end of 2005, the division had lost a reported $4 billion. This staggering figure will not allow Microsoft lose motivation to stay on top of the gaming industry. Microsoft's 2008 outlook suggests that sales will continue to grow. The marketing strategy to sell consoles below cost in order to contain market saturation and gain profits on software and peripherals that have a much higher profit margin is attributed to the lost earnings.

Marketing Objectives

With the Xbox 360 name being tied to that of the Microsoft name, we feel that the awareness of our brand is particularly high. Based on this, brand awareness should range upwards to 95%. Based on our high brand awareness percentage, we at Microsoft have three main objectives. The first is to gain a sizable portion of the growing video gaming market. While Personal Computer gaming is still advancing and surpassing gaming platforms in overall performance, the software businesses has become stagnate. Secondly, being that Microsoft has been tied to the PC software industry for years, Microsoft has built trust with a large number of societies which has in turn made the Microsoft name very appealing. Through this appeal, Microsoft would like to broaden its electronics scope by entering into the home entertainment business. Thirdly, Microsoft has the reputation of being a PC software monopoly, which has turned away many would-be customers. We feel that Xbox 360 will soften this view because we are still new to the gaming platform industry.

Target Markets

The target market for the Xbox 360 will be very vast, in large part due to its array of capabilities. Microsoft's main target will be that of the male gamer ranging from 18 to 34 in age. Compared to other gaming platforms, Xbox 360 will be the most powerful computer ever sold for platform gaming. We will also be targeting females by including multimedia features which come standard on every Xbox 360. Not only can the Xbox 360 play DVDs and CDs, but it can also play media files stored on its own hard drive.

Marketing Mix

The Xbox 360 will be available in three versions. Prices start at $279 for the Xbox 360 Arcade, $349 for the full Xbox 360, and $449 for the Xbox 360 Elite. The Xbox 360 Arcade is the simplest system package. It includes an Xbox 360 console, a wireless Xbox 360 game pad, composite AV cables, and a 256MB memory unit for game saves. The system also comes with five Xbox Arcade games. The full Xbox 360 package includes the Xbox 360 console, a 20GB hard drive, a wireless Xbox 360 game pad, composite AV cables, and HDTV cables. The Xbox 360 Elite package will come equipped with a black Xbox 360 system, a 120GB hard drive, HDMI support, AV cables, a black headset, and wireless game pad accessories.

Product

The Xbox 360 is a video game console system manufactured by Microsoft. It can play Xbox video games, Xbox 360 video games, DVD movies, audio CDs, and video and game content downloaded from the Xbox Live online service. Owners can view photos and listen to music using Xbox 360's photo viewer and music player software. The Xbox 360 life-cycle will range upwards to five years since this is the usual time lapse that occurs before a new game counsel is introduced to improve upon the last.

The most striking competitive advantage that Xbox 360 has over the competition