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With the overall cost leadership strategy, a firm dissects each component of the value chain in an effort to trim costs in each area. The cost leader uses its experience with production processes to create products at lower costs. Thus, the overall cost leader will offer similar products as its competitors, but will realize higher per product returns.
Differentiation: A firm differentiates itself by creating a product or service that is unique and valued by customers. Differentiation can be achieved through brand image, technology, innovation, and features. A firm can achieve advantages of differentiation when their price premiums exceed the extra costs derived from having a unique product or service. Focus: A focus strategy is based on choosing a narrow competitive scope within an industry. A firm achieves competitive advantage by tailoring strategy to serve a segment or group of segments, and then dedicating itself exclusively to the chosen segment(s). A focus strategy can either target cost advantages or differentiation. Nintendo’s strategy for the Wii was to create a video game system that would differentiate itself from the Play Station and the Xbox. Nintendo’s engineers created differentiation by developing an innovative motion sensor controller that let the player become a physical part of the game. Nintendo redeveloped the controller to make it an extension of the player’s body, enabling a player to use their body motion to act out the action that the figure would do on the screen (e.g. swing a tennis racquet, roll a bowling ball or throw a punch). This motion sensor controller was very successful in differentiating the Wii from other game consoles that used the traditional button and joystick controller. The Wii control proved very successful for Nintendo, demonstrated by higher than expected demand when it was first introduced in late 2006. The gaming industry also embraced the new motion sensor controller and video game developers showed a strong interest in creating new titles to be played on the Wii. Nintendo’s differentiation strategy proved more successful than even Nintendo had envisioned.SEE THE CASE DVD – one of the clipsshows how many different customer segments are attracted to the Wii.NOTE – ADDITIONAL READING, EMBEDDED VIDEO:Here’s a review by CNET that has some videosdemonstrating the first device, and then discussing the difference between the Nintendo, Sony and Microsoft products, and demonstrating accessories:(scroll down for videos, let them play one after another)The introduction of the Wii and Wii Fit opened up a whole new class of user, and a whole new set of applications for the gaming system: psychological research into the connection between cognition and action, physical rehabilitation, treatment for movement disorders like Parkinson’s, and treatment for depression. See various articles at:To further understand Nintendo’s global strategy, download the most current Annual Report from