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Upbeat Nishida Outlines New Plans For Sony

Cautiously optimistic about the state of the industry, Fujio Nishida, president of Sony Electronics, discussed new marketing strategies for his company, highlighted its leading market share in a variety of key product categories, and discussed industry issues during his annual press roundtable here at the Sony Building.

“We must focus on our customers,” rather than just focusing on selling products, was the message of Nishida. While he quoted NPD Techworld numbers showing that Sony’s brand share in units (see chart on p. 26) and dollars led the industry in camcorders, personal audio, accessories, home audio, projection TV, digital cameras, color TV and DVD, Nishida outlined the new strategy.

“It is hard to differentiate products today, especially in DVD, where companies can easily get digital components and produce decks that [sell for] $70 at retail. Differentiation is our mission. We must see the customer first, sell as much products to those specific consumers as possible through the right retail channels,” Nishida explained.

He outlined several broad customer types Sony is targeting, namely Gen Y, 18- to 24-year-olds; Gen X, 24- to 34-year-olds; boomers, 35 to 49; and matures, who are over 49 and whose children have conceivably left the home and are on their own. “This approach is new for Sony and new for the consumer electronics business,” Nishida said, something that packaged goods companies have done for years.

This approach seems to be working and will be broadened this year. During 2001, Sony claimed the following growth in the following demographic categories vs. the industry (whose numbers are in brackets): Gen Y, 145 percent, [86 percent]; Gen X, 16, [-9.2]; boomers, 3.1, [-13.2]; and matures, 6.6, [6.3].

Sony is “aiming for them,” in the words of Nishida, with a variety of products. The Sony Sports line with a combined CD, radio and tuner is for Gen Y; the Liv home audio lineup for Target is designed for women 18 to 34 years old; and MiniDisc is also designed for Gen Y, “who rip CDs and download music,” Nishida said.

The company is also cross-promoting its products using the SonyStyle Web site, retail partners and Columbia TriStar Pictures, which is owned by Sony’s parent company. SonyStyle is offering cross-promotions on the Columbia TriStar hit “Spiderman,” and “MIIB” (Men In Black’s sequel) will be promoted through Best Buy.

Sony Electronics is also pursuing different business initiatives to improve internal and external efficiencies. Nishida said that Sony is “committed to aggressive supply-chain management” and to work closely with “our retail partners” in terms of shipments and delivery. For instance Nishida said, “We have TV production in Mexico, which means we can respond [to the market] in two days. Our Vaio [PC] operation is based in San Diego. We can ship to consumers or retailers in 48 hours.” He added that digital cameras and camcorders ship directly from Japan and China weekly, while home audio comes from those two countries, via boat, within 30 days.

In reviewing the previous fiscal year, which ended March 31, and the current condition of the U.S. market, Nishida said, “During November and December we had good sales. By the end of the fiscal year sales were OK in the U.S., much better than we anticipated. They were slightly higher than the prior year.” He noted during the first half of calendar year 2001 sales were “very bad since the economy was weak.”

As a result, Sony’s “consumer retail side” grew. Vaio PCs had the “highest market share in recent years and our share of audio/video categories rose.” He noted that this March, Vaio was second only to Hewlett Packard in market share at retail, while its market share of audio/video categories grew by 19 percent. “In DVD, we were able to overcome [the challenge] of Chinese and Korean brands that were selling under $100 [decks].”

During the first two months of the new fiscal year, Nishida reported that there are “positive indications … retail sales are up and we are ahead in profits during April and May.” He cited double-digit growth for Sony at retail for its color TV, Clie, Vaio, camcorder, personal and home audio and DVD lines.

Sony’s Fair Share