Nintendo Wii & Porter's Three Strategies

Nintendo Wii did not come out first in this current console generation. It came out after the Xbox 360, but before the Playstation 3. Because it came out before the Playstation 3, it did have an additional advantage. However, the Wii surpassed the 360's sales even though Xbox 360 was the first mover of the console generation.

Second, Nintendo Wii had price leadership. The system was the least expensive to make and then sold for lowest price. As a result, the system was more accessible to more people. Nintendo has always been the cost leader, and this time that advantage really helped the Wii take off in sales.

Third, Nintendo Wii drove differentiation and market segmentation together simultaneously. They innovated with new controllers that included motion control, the nunchucks, using the remote as a pointer device, a wireless, motioin-control steering wheel, a wireless light gun, and a balance board. They also then used those innovative hardware devices to release innovative supporting games such as Wii Play, Wii Sports, Wii Fit, and Wii Music (among many others). They also released innovative games like Brain Age that actually improve your mental abilities.

Because all these games targeted non-gamers, their advertising also targeted non-gamers and casual gamers. As a result, many people bought the Wii and played it who would have never played it otherwise, including grandmas, young children, and a lot more women.

================================================

Of the three strategies (Cost Leadership, Differentiation Strategy, and Segmentation Strategy), which do I think works the best? Ultimately, I agree with all three strategies, so I think if you can combine them then you're pretty much on top. My favorite example is Wii (see more details in my Wii post above). Wii managed to nail cost leadership, differentiation, and segmentation. They have the cheapest system, it is very different from the Xbox 360 and PS3, and they are marketing to new people (adding grandparents, parents, and a lot more women).

That said, I think the most important variable is differentiation. There are shampoos and deoderants that get released where the only difference is the price or the marketing/branding. However, The biggest success can be the differentiation in the product. Wii is more well known for the fact that the motion controls and the games that support them open up new customers and make the fans drool... than they are known for having the cheapest systems or for their commercials and branding.


- TAE