nintendo strategy case study

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What Can We Learn from Nintendo?

Back in 2007, my colleague Scott Anthony argued that Nintendo’s Wii would be a disruptive innovation that could catch Sony and Microsoft off-guard. The core of the argument was that Nintendo’s strategy of “competing against non-consumption” would allow it to fly under the radar of Microsoft and Sony, which were engaging in an arms race […]

Back in 2007, my colleague Scott Anthony argued that Nintendo’s Wii would be a disruptive innovation that could catch Sony and Microsoft off-guard. The core of the argument was that Nintendo’s strategy of “competing against non-consumption” would allow it to fly under the radar of Microsoft and Sony, which were engaging in an arms race to provide ever better-looking games to their most-demanding consumers at premium prices.

• TH Tim Huse is a Senior Associate with Innosight. He has worked with Fortune 500 companies in the healthcare industry and the consumer packaged goods industry on a broad range of topics including technology assessment, building organizational innovation capabilities, and developing disruptive ventures in Western Europe and South Asia.

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Nintendo Marketing Strategy: Marketing Mix (4Ps) Analysis & Iconic Ad Campaigns

Learn about nintendo's iconic marketing strategy and advertising campaigns. read how nintendo aces the 4ps of marketing mix - product, price, promotion & placement..

• overview#goto" data-overview-topic-param="brief">A brief overview of the Nintendo Entertainment System
• overview#goto" data-overview-topic-param="marketing">Nintendo Marketing Strategy
• overview#goto" data-overview-topic-param="iconic">Iconic Nintendo Ad Campaigns
• overview#goto" data-overview-topic-param="sega">How Nintendo beat SEGA?
• overview#goto" data-overview-topic-param="pandemic">Marketing during the pandemic
• overview#goto" data-overview-topic-param="key">Key Takeaways

Nintendo is one of the few recognisable brands whose fan base spans across generations. It's known for its popular games like Mario, Pokemon, The Legend of Zelda, Animal Crossing, etc. Such IPs make it a very valuable company with a market capitalization of $49.97 Billion . While its products play a key role in its legacy, Nintendo's marketing strategy ensured they stay on top of the mind of its loyal customer base.

In this marketing strategy case study, we will explore how Nintendo built a household brand name that is aspirational and nostalgic for gamers via its advertising and marketing strategies.

A brief overview of the Nintendo Entertainment System

Started in 1889 by Fusajiro Yamauchi in Japan, Nintendo was originally a leader in playing cards for four decades for hand-painted hanafuda cards. It tried multiple business verticals including running a taxi service and love hotels. It even tried to become a food company to sell ramen noodles. The Nintendo brand we know today was not realised until its first console release of Color TV-Game in 1990.

Image Source - Business Insider

Today Nintendo caters to casual gamers and serious gamers via its host of gaming IPs. Its latest console, the Nintendo Switch made 10 million sales worldwide within the first three days.

A key to Nintendo's massive success is its ability to keep reinventing itself. Today the company is incredibly clear about its position and legacy in the gaming industry. Yet it is not afraid to explore new horizons with its gaming characters, new technology and even core business model. Irrespective of how Nintendo shapes, its customer fan base is always willing to support its journey. Nintendo's marketing strategy is largely responsible for nurturing its sticky customers. Let us explore what marketing strategies helped Nintendo buildd a loveable brand across the world.

Nintendo Marketing Strategy

Nintendo caters to a wide variety of audiences having a common love for video games. This includes an older audience with their Mario nostalgia and young gamers looking for a virtual reality-based gaming experience. Satisfying such a wide target group across its market capitalization isn't easy. Its marketing game helps navigate this diffused terrain.

Here's how Nintendo's marketing strategy is designed (explained with the 4Ps of the marketing mix):

Product: Nintendo Product Strategy

Nintendo's game development strategy doesn't only focus on hardcore gamers who expect high-end graphic cards or gaming consoles. They invested across the video game industry including mobile gaming, arcade games, theme parks, home console, etc. They went broad when it came to defining their target customers, and experimented to suit each one's taste across generations as it grew. Some of its most iconic gaming products include -

Arcade games

A major turning point for Nintendo was in 1981 when it released Donkey Kong which sold more than 60,000 copies in North America. Donkey Kong bought Nintendo out of its financial hardship and triggered its expansion across the world.

Gaming Consoles

When arcade games became a thing of the past due to the rise of personal computers and excessive competition, Nintendo switched to making toys. They innovated with NES consoles targeted at teens to provide an immersive gaming experience backed by stories or a narrative. This led to the making of many successful characters like Super Mario bros, Zelda, etc that engaged the game players.

Other popular gaming consoles that Nintendo released include the Nintendo Dual Screen, Wii U series, Gameboys, etc. Nintendo was also one of the early brands to experiment with virtual reality games. The Nintendo Virtual Boy was released in 1995 that aimed to take their 'immersive gaming experience' a step ahead. Thus, Nintendo has always adapted to what the gaming market demanded and aligned to necessary competitive trends.

Pricing: Nintendo Pricing Strategy

In the gaming industry, change is a constant as gamers constantly seek new experiences. Considering how Nintendo is always releasing new products to keep up with its huge target market, its pricing strategy also is varied to suit accordingly.

Most new and hardcore gaming experiences would be priced at a premium. Casual gamers are kept happy with low-end gaming consoles or mobile games. Nintendo games are also not fixed - the price decreases across the product life cycle. This means, older products that did not perform well are eventually sold at discounted prices. It also aligns its pricing strategy with that of its competitors Sony Playstation or Xbox.

A key advantage that a brand like Nintendo has is how its older products are easily capitalized via 'nostalgia' reselling. Many of Nintendo's Switch models or other consoles act as collectables for fans who are passionate about games.

Placement: Nintendo Placement Strategy

Nintendo successfully maintains both physical and online distribution networks. Throughout its 130+ years of history, Nintendo has grown enough brand equity to flourish its network to reach a wide audience.

Nintendo managed several partnerships with complementary brands to increase their gaming console adoption. One such partnership was with Blockbuster and Toys 'R' Us which enabled their customers to rent game consoles before making a final purchase.

Image Source - AP News

Otherwise, its offline distribution also includes hypermarkets like Game Planet, Walmart, local electronic arts stores, and pawn shops.

Nintendo online stores

Nintendo also has an online store to download any game and manage updates as released. They have a separate section for 'upcoming games' on their website that generates excitement among their loyal fans. eBay.com and Amazon also are popular distribution sites where Nintendo games are available.

Promotion: Nintendo Promotions Strategy

Nintendo consistently positions itself as a company in the entertainment space, and not technology. In its advertisements, it focuses on how the customer would experience the game on playing its video games than any technology specifics.

Due to this, Nintendo's marketing strategy plays a lot of importance in its product launch campaigns. They distribute tons of freebies like T-shirts, goodies, posters, console cases, etc.

Many brand partnerships with companies like Maxim magazine, Heineken, Walmart, etc have helped them market their consoles to their audience. Nintendo is also actively involved in Game Developer Conferences to attract good talent. Usual ad campaigns for the holiday season also make up for its sales.

Their latest Nintendo Switch looks very modern with a stylish logo. Here's an ad for Nintendo Switch sport that showcases how the brand likes to present itself -

You can observe how their ads focus on the 'experience' one has on using the console more than anything else.

Nintendo decided to also use a lot of nostalgia-themed marketing to target the audience of previous generations who enjoyed playing Mario.

But even so, Nintendo marketing strategy is such that the gamer community knows what to expect from the brand with every new release - a familiar and fun experience. Today, Nintendo marketing strategy also includes social media like Facebook, Twitter, Instagram, Tik Tok, etc to capture the market share that belongs to the younger generation.

Iconic Nintendo Ad Campaigns

A key advantage of Nintendo is how many of its consumers have played games using its products for more than 130 years. From the times of visiting gaming stores to today simply playing games on the cloud, Nintendo has seen it all. This experience is visible in their advertising campaigns as they have also refined over a long period towards better clarity.

Playing with slogans

Nintendo loves to play the slogans game in their advertising.

One of its famous and early slogans is for the Nintendo NES and the Nintendo Entertainment System - "Now you're playing with power!"

For their game boy color, they used the slogan - "Escape to a World of Color". They also highlighted its portability when first released - "Now you're playing with power, portable power!"

Another famous campaign includes the slogan 'Touching is good". The act of 'touching' is forbidden in most societies, here Nintendo plays with the gamer's mindset of how 'touches' are important while controlling their gameplay. Here's a poster for Nintendo DS with this campaign -

Not all advertising campaigns were a success - for example, the Virtual Boy campaign for their Virtual Reality games was a failure. It used the slogan - "A 3-D game for a 3-D World." and the overall experience was too early for the 1995 audience.

How Nintendo beat SEGA in the games market using content?

SEGA had better graphics and technology than Nintendo. But the casual game players hardly cared about technical specifications and expected immersive experiences - something that Nintendo had focused on early. Nintendo focused on the content of its video games. They worked on storytelling and making the gamer complete a quest in their video games. This insight was drawn from the audience research itself. This shows how Nintendo knew when to focus on their market competitors and when to listen to the audience.

But SEGA too copied this strategy and released memorable characters like Sonic the Hedgehog that helped it capture 65% market share at a point. On releasing Game Boy is when Nintendo crawled back into the arena to finally beat SEGA around the 1990s.

Marketing of Animal Crossing and Nintendo Switch during the pandemic

The global COVID-19 pandemic was a perfect time for the video game industry to flourish. Nintendo released a casual, family-friendly game that anyone can play called 'Animal Crossing'. Many families and their friends used such games to socialize as everyone got locked into their homes due to the pandemic. This multi-player game helped Nintendo ride the growing popularity of casual games like 'Ludo' and hence acquire new customers.

Lessons from the Wii U proposition and Nintendo DS

Nintendo also defined how video games were played for more than a decade in the 2000s with its Wii series of video games. It included Wii remote that enabled one to play games by pointing at the screen and a wireless controller. This gaming console successfully attracted casual gamers. For its core gamers, it released Wii U in 2012. The Wii series proposition was to appeal to the hardcore gamers market who appreciate good graphics and a better playing experience. But many were confused about whom Wii U truly served.

Optimizing marketing strategy for Nintendo Switch

Nintendo Switch learned from the hurdles caused by Wii gaming consoles' confusing positioning. The Nintendo Switch brand focused on a clear message of being portable, interactive, multi-platform, etc. It focused on building a consistent brand that its large target audience could easily understand.

Nintendo also gambled with Nintendo Dual Screen (DS) systems when their major competitors like Sony released their Sony Playstation. It was in a way better version of their Game Boy Advance (GBA). It was successful thanks to better graphics and the age of flip phones. Learn more about How Graphics worked on the Nintendo DS .

Key Takeaways from Nintendo's Marketing Strategies

Nintendo's 130+-year-old play in the entertainment market has lots of lessons to take away for entrepreneurs, especially in the consumer space. Here are some key lessons from the Nintendo marketing strategy:

Listen to your audience

Nintendo always focused on its customers and how they received their video games. Any latest technology breakthrough or competitive landscape hardly impacted their company DNA. They did experiment in their early days but worked on optimising their positioning for clarity as they matured as a brand.

You don't have to be the first

Nintendo was neither the first video game company nor the first to bring a new console to the market. It never focused on being 'the first' to bring any technology to the masses. They primarily learned by making mistakes and experimenting without fear, leaving it all to the audience's response. Eventually, today it has found its positioning in the market.

You can enter a saturated market

When Nintendo entered the arcade games market in the USA, it was already saturated with cheap copies and multiple gaming stores springing everywhere. Differentiation was difficult, but Nintendo focused on its character-narrative strategy to nurture new fans in the USA. It focused on its niche. Today, the Nintendo console maintains a market share of 29%. They fiercely play and compete as the rest of the gaming console market share is owned by Xbox (25%) and Sony Playstation (46%).

To conclude, the Nintendo marketing strategy teaches businesses about building a consistent brand that is not afraid to explore. Its journey shows you what it takes to buildd a 100+-year-old brand. If you're in the entertainment business, read our Netflix marketing strategy case study to gain more insights.

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Blue Ocean Thinking

Nintendo & Blue Ocean Strategy: Record Profits ... Again

The blue ocean strategy switch blew away the competition by ignoring it, just like the wii did way back when..

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Results are in and the Nintendo Switch is the second bestselling videogame console in history, in both volume and revenue. Only 2008 Nintendo Wii sales were higher:

Story: Nintendo Switch: 2020 Sees the Second-Highest Annual Dollar Sales in US Console History

I briefly worked with Nintendo way back when while they were developing the Wii, explaining the core of blue ocean strategy in the days before the book.

I knew what they were working on and found it wildly exciting. When the Wii was released, I went with my then young son and waited in the parking lot of Target at 2 AM to stand in line and buy the console.

The excitement in the air was palpable. Enthusiasts stood around talking to one another and playing on their DS handheld consoles. My son quickly gave up and went to bed in the car. I asked people why they were excited and got some really interesting information.

We waited and waited. Eventually, chipper Target employees, amused to see us there, arrived and handed out numbers. Soon after, the door finally opened and we bought a Switch. It was the coolest console I’d ever imagined, even having worked on the strategic framework (I never got the details).

Not long after, others from the blue ocean strategy team asked if I could get them consoles to check out. I called Nintendo and they asked how many we wanted. Sure, that was a little anti-climatic after the all-nighter but showed how the firm believed in and embraced blue ocean strategy.

My long-time friend and colleague, Jason Hunter, wrote a case study about the original Wii. It’s distributed, like all blue ocean strategy case studies, by Harvard Business School Publishing:

The Nintendo Wii: Lessons Learned from Noncustomers

I eventually went on to write about the Nintendo Switch and how the firm went back and forth from the Wii (blue ocean) to the Wii U (red ocean, and a total flop) back to the blue ocean Switch. My piece is here:

Nintendo Switch: Shifting from Market-Competing to Market-Creating Strategy

Like all genuine blue ocean strategy cases, both were written under the direction of Blue Ocean Strategy co-authors and INSEAD professors Chan Kim and Renée Mauborgne.

During consulting projects, I’m often challenged to provide cases where companies actually used blue ocean strategy and Nintendo is one of the best. I strongly recommend buying and reading the cases above to see why. They’re not expensive and provide a great overview of blue ocean strategy in the real-world.

Back to the Switch, Nintendo became an inadvertent lab experiment demonstrating that the same company, operating in the same market, during a similar timeframe, and even with the same competitors, can use blue ocean strategy to fly (the Wii and Switch) or pivot to competitive strategy and sink (the Wii U).

To contextualize, when the Wii was released there were three console game competitors, Sony, Microsoft, and Nintendo. Sony was releasing the PS3 that featured a graphics chip that cost over a billion to develop and could fly cruise missiles. Microsoft was selling Xbox 360 consoles, losing almost as much per system as the sale price. Before the Wii, Nintendo was a distant third who couldn’t afford to lose any money at all on each console sale.

Many analysts believed Nintendo should have exited the home console market, focused on handheld systems, and simply created games for Sony and Microsoft. Instead, Nintendo released the Wii and outsold Sony and Microsoft combined.

A couple of years ago, I was talking to a Microsoft product manager who was on the Xbox team when the Wii was released.

“They sure surprised us as brutal competitors,” he said.

Actually, they aren’t. Even after all those years, he still didn’t get it, which I’ll take to mean that Microsoft didn’t understand. Nintendo wasn’t competing with Sony and Microsoft. Nintendo produced a game console that appealed to gamers and non-gamers: noncustomers in blue ocean strategy terminology.

While Sony and Microsoft were beating one another up to buy a Playstation or an Xbox, Nintendo focused on selling gamers a Wii (and, later, a Switch) and a Playstation or Xbox, the latter two being optional for those who wanted a traditional high-powered game system.

Today, the young son I waited in line with is all grown up; his Wii put away on a dusty shelf. But his fifteen-year-old sister is inseparable from her Switch and the high-quality games on it. Young, old, male, female, gamer, non-gamer … Nintendo’s use of blue ocean strategy has, again, put them solidly on top by not stressing about the competition.

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Blue Ocean Strategy Examples: Nintendo's Blue Ocean 👾

For this Nintendo Blue Ocean Strategy example, we will uncover how this a game-changing strategic approach to business and marketing has a strong focus on succeeding without competing. How? By creating a whole new market and an uncontested market space. Nintendo has been a master of this strategy for years. And we’re about to show you exactly how they did it .

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Let’s dive into this Blue Ocean strategy example and discover how Nintendo has dominated the market with best-selling consoles without even competing with other gaming giants such as Microsoft ( Xbox Game Studios ) and Sony PlayStation . Blue Ocean Strategy is a game-changing strategic approach to business and marketing that focuses on succeeding without competing. How? By creating a whole new market and an uncontested market space. And Nintendo has been a master of this strategy for years.

Think about it: the Wii console, which revolutionized the gaming industry with its motion control, was a product of Blue Ocean Strategy . And let’s not forget about the wildly successful Pokemon GO app, which tapped into a whole new market of mobile gamers. 🚀

By focusing on innovation and creating unique experiences, Nintendo has been able to consistently stay ahead of the competition and deliver unparalleled value to their customers.

So the next time you pick up a Nintendo product, remember that their success isn’t just a result of luck – it’s a result of their savvy use of Blue Ocean Strategy. 

If you want to learn more, check out our latest video on the case study of Nintendo’s Blue Ocean Strategy.

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Nintendo Marketing Strategy 2024: A Case Study

Nintendo, a household name in the gaming industry, has captured the hearts of gamers worldwide with its iconic franchises like Mario, Pokémon, and The Legend of Zelda. But what sets Nintendo apart from its competitors? In this case study, we will delve into Nintendo’s marketing strategy and explore how the company has cultivated a loyal fan base and continued to dominate the gaming market.

From the very beginning, Nintendo has been a pioneer in the gaming industry, demonstrating the power of strategic product positioning and innovation. The company’s history dates back to 1889 when it started as a playing card company. Over the years, Nintendo has evolved and adapted, transforming itself into a gaming giant and revolutionizing the industry with groundbreaking consoles and games.

A Brief History of Nintendo

In the early 1980s, Nintendo faced a pivotal moment when the gaming industry experienced a crash. However, the company’s introduction of the Nintendo Entertainment System (NES) and popular titles like Super Mario Bros. played a significant role in reviving and reshaping the industry.

The success continued with the release of the portable gaming device, Game Boy, which not only introduced the world to the beloved Pokémon series but also became a global phenomenon.

Fast forward to the present day, Nintendo’s latest console, the Nintendo Switch, has been widely praised for merging handheld and traditional gaming, offering unique and immersive gameplay experiences that cater to both casual and serious gamers.

Nintendo’s Target Audience

With a diverse target audience that includes both casual and serious gamers, Nintendo has successfully created games suitable for all age groups. From Mario Kart’s fun-filled races to Ring Fit Adventure’s fitness gaming experience, Nintendo’s games appeal to kids, teens, adults, and families alike.

Product Positioning and Development

Nintendo’s strategic product positioning and innovative game development have set the company apart from its competitors. By constantly pushing boundaries and introducing new gameplay mechanics, Nintendo has forged its own path in the industry, creating games and consoles that offer unique experiences.

Pricing Strategies

To cater to different segments of the gaming market, Nintendo employs various pricing strategies. Alongside premium pricing for new and hardcore gaming experiences, the company offers discounts for older products over their life cycle. Moreover, with options like the Nintendo Switch Lite, Nintendo provides lower-priced alternatives, appealing to casual gamers without compromising on quality.

Digital Marketing Tactics

Nintendo recognizes the importance of digital marketing in engaging with its target audience. Through social media platforms, online ads, and influencer partnerships, the company effectively tailors its marketing campaigns to reach and connect with gamers.

Distribution Channels

By utilizing a multi-channel distribution strategy, Nintendo ensures its products are readily available to customers. The company collaborates with retail stores like GameStop and online marketplaces such as Amazon, making it convenient for gamers to access and purchase their favorite Nintendo games and consoles.

Promotional Campaigns

Nintendo’s promotional campaigns focus on online ads and social media platforms like Twitter, Facebook, and Instagram, reaching a wide audience of gamers and generating excitement for upcoming releases.

Key Takeaways:

• Nintendo’s strategic product positioning and innovative game development have been key factors in maintaining its position as a leader in the gaming industry.
• The company employs various pricing strategies to cater to different segments of the gaming market, including value-based pricing and lower-priced options for casual gamers.
• Nintendo utilizes digital marketing tactics such as social media, online ads, and influencer partnerships to engage with customers and build brand awareness.
• The company utilizes a multi-channel distribution strategy, working with retail stores and online marketplaces to make their products readily available to customers.
• Nintendo’s promotional campaigns focus on online ads and social media platforms to reach a wide audience of gamers.

Nintendo, a gaming industry pioneer, has a storied history that spans over a century. The company was founded in 1889 in Kyoto, Japan, initially starting as a playing card manufacturer. While Nintendo’s early focus was on traditional card games, its journey into the world of video games began in the 1970s, marking a significant shift in the company’s direction.

In the 1980s, Nintendo revolutionized the gaming industry with the release of iconic games like Super Mario Bros. and The Legend of Zelda. These games, along with the introduction of the Nintendo Entertainment System (NES), brought gaming to the mainstream. Nintendo’s commitment to delivering immersive and memorable gaming experiences propelled the industry forward.

Building on its success, Nintendo continued to innovate with the release of the Game Boy in 1989. This revolutionary handheld console allowed gamers to take their favorite games on the go and created a new market segment for portable gaming. The Game Boy’s popularity reached unprecedented heights, selling millions of units worldwide and solidifying Nintendo’s position as a leader in the gaming industry.

In 2006, Nintendo once again disrupted the gaming landscape with the launch of the Wii console. With its innovative motion controls, the Wii appealed to a wider audience beyond traditional gamers. Families and casual gamers were drawn to the Wii’s intuitive gameplay, making gaming a social and interactive experience. The Wii’s success further cemented Nintendo’s reputation for pushing boundaries and capturing the hearts of gamers around the world.

In 2017, Nintendo introduced the Nintendo Switch, a hybrid console that offers the flexibility to be played both as a handheld device and connected to a TV. This groundbreaking console gained popularity for its versatility and seamless transition between home console and handheld gaming. The Nintendo Switch quickly became one of Nintendo’s most successful consoles, appealing to gamers of all ages.

Throughout its history, Nintendo has continually adapted its marketing strategies to reach a wider audience. The company embraced social media and influencer marketing , partnering with popular YouTubers and streamers to generate buzz around their products. Nintendo also tapped into the mobile gaming trend, collaborating with mobile game developers to bring iconic Nintendo characters and games to the mobile platform.

Nintendo’s commitment to its community is evident through events, tournaments, and encouraging user-generated content sharing on social media platforms. By fostering a sense of belonging among Nintendo fans, the company has built a passionate and loyal community.

Today, Nintendo’s market capitalization stands at over $48.87 billion, and the company continues to innovate and captivate audiences globally. With a rich history of milestone achievements, Nintendo remains committed to providing high-quality gaming experiences, embracing innovation, and creating sentimental bonds with its customers.

Nintendo’s marketing strategy is designed to appeal to a diverse target audience, including both casual gamers and serious gamers. The brand has successfully captured the hearts and minds of gamers of all ages, from nostalgic older players who grew up with iconic titles like Mario to younger enthusiasts seeking innovative gaming experiences.

Nintendo’s target audience encompasses both casual gamers who enjoy accessible gameplay and family-friendly content, as well as serious gamers who crave challenging gameplay and immersive narratives. The brand’s ability to cater to these distinct segments has contributed to its enduring success in the gaming industry.

Among its target audience, Nintendo holds a strong presence among children, teenagers, and families. The company’s commitment to creating entertaining and inclusive gaming experiences has made it a trusted choice for parents seeking age-appropriate content for their children.

With four of the top ten best-selling consoles, Nintendo has proven its appeal to a wide range of gamers. The company’s competitive pricing strategy, with the Switch’s starter pack ranging from $349 to $499, makes their products accessible to different consumer segments.

Furthermore, Nintendo has leveraged the power of social media to build a robust online community. With 6.5 million fans on Facebook and high engagement on other social media platforms, the brand effectively connects with its target audience and fosters a sense of community among gamers.

By understanding the preferences and needs of their target audience, Nintendo can continue to develop products and marketing messages that resonate with their customers. Market segmentation allows the company to allocate resources efficiently, optimize marketing budgets, and tailor their offerings to specific customer segments. The result is increased customer satisfaction, loyalty, and a competitive edge in the gaming market.

Next, we will delve into how Nintendo positions and develops its products to meet the demands of its target audience.

Nintendo has firmly established itself as a powerhouse in the gaming industry, with a market capitalization of $49.97 billion. The company’s success can be attributed to its strategic product positioning and continuous game development efforts.

One of Nintendo’s strengths lies in its ability to cater to a diverse target audience, including casual gamers and serious gamers. Over the years, Nintendo’s gaming consoles have evolved and captured the hearts of players of all ages. Iconic releases such as the Game Boy, Nintendo 64, Wii, and Nintendo Switch have revolutionized the gaming experience.

The introduction of the Nintendo Switch in 2017 further solidified Nintendo’s position in the market . This innovative console has become a favorite among gamers of all ages, offering the flexibility of both handheld and traditional console gaming. Its success has contributed significantly to Nintendo’s market dominance.

Nintendo understands the demographics of its target audience and caters to their needs. With a strong presence among children, teenagers, and families, Nintendo’s products appeal to a wide range of players. The target audience demographics also include a mix of male and female players, encompassing teenagers and adults alike.

Nintendo’s game development is driven by a deep understanding of its target audience’s motivations. Entertainment, family bonding, competition, immersive storytelling, and skill development are key factors that attract players to Nintendo’s gaming consoles.

The company utilizes a multi-channel distribution strategy to ensure that its products are readily available to customers. This strategy allows Nintendo to reach a wider audience and meet the demands of the market efficiently.

Nintendo’s gaming consoles offer unique features that set them apart from the competition. Motion-controlled gameplay, virtual reality, and innovative game development are some of the distinguishing factors that make Nintendo’s products stand out.

Nintendo’s success is further enhanced by its iconic game franchises, including Super Mario, The Legend of Zelda, and Pokemon. These franchises have become synonymous with the Nintendo brand, delivering immersive gaming experiences that keep players engaged.

Pricing strategies play a crucial role in Nintendo’s product positioning. By adapting to market trends and carefully analyzing the gaming industry, Nintendo ensures that its products remain competitively priced while maintaining their value and quality.

Through consistent alignment between product development and positioning strategies, Nintendo has carved out a unique space in the gaming industry. This alignment fosters increased sales and adoption, allowing Nintendo to maintain its competitive edge.

In conclusion, Nintendo’s strategic product positioning and continuous game development efforts have propelled the company to the forefront of the gaming industry. With its innovative gaming consoles, unique features, and iconic game franchises, Nintendo has captivated a diverse and loyal audience. By understanding the motivations of its target audience and utilizing effective pricing and distribution strategies, Nintendo maintains its position as a leading force in the gaming market.

Nintendo employs various pricing strategies to cater to different segments of the gaming market. The company focuses on maximizing market penetration while sustaining brand value through its pricing strategy. One of the key elements of Nintendo’s pricing strategy is value-based pricing. With value-based pricing, Nintendo considers what gamers feel is a fair price and offers different pricing options based on the features and preferences of different gamer segments.

• For hardware, Nintendo uses value-based pricing to offer accessible price points for casual gamers while also providing higher-priced options with advanced features and capabilities for serious gamers.
• For flagship game titles, Nintendo adopts a premium pricing strategy, recognizing the value and demand for highly anticipated and exclusive games.
• For entry-level products, Nintendo implements competitive pricing to attract gamers who are new to the Nintendo ecosystem and looking for affordable options.
• For digital content on the Nintendo eShop, Nintendo utilizes dynamic pricing, offering discounts and promotions to incentivize purchases.
• For consoles, Nintendo employs strategic bundle pricing, bundling consoles with popular games or accessories to provide added value to customers.

Nintendo’s pricing strategy is not static—it evolves throughout the lifecycle of a product. During the launch phase, Nintendo adopts premium pricing to capitalize on early adopters and the hype surrounding a new release. As the product becomes established in the market, Nintendo transitions to competitive pricing to broaden its customer base. Finally, as the product enters the declining stage, Nintendo adopts promotional pricing strategies to stimulate sales and maintain market share.

This approach has allowed Nintendo to reach a wide range of gamers and ensure that its products are accessible to different segments of the gaming market. By leveraging value-based pricing and offering a variety of pricing options, Nintendo continues to thrive in the highly competitive gaming industry.

Nintendo, with its vast popularity and innovative gaming consoles, understands the importance of digital marketing in reaching and engaging with its target audience. By leveraging various digital marketing tactics, such as social media marketing , online advertising, and influencer partnerships, Nintendo has successfully built a strong online presence and brand loyalty.

In the realm of social media marketing, Nintendo has capitalized on platforms like Twitter, Instagram, and YouTube to connect directly with its fans and build a thriving community. By sharing captivating content, including game updates, trailers, and behind-the-scenes footage, Nintendo keeps its audience engaged and eager to learn more about their favorite franchises and upcoming releases.

Online advertising plays a crucial role in Nintendo’s marketing strategy. Through strategic placements on popular gaming websites and platforms, Nintendo ensures maximum visibility for its products. By targeting the online gaming community, Nintendo effectively communicates the unique features and experiences offered by its consoles and games, driving interest and ultimately leading to increased sales.

In addition to social media marketing and online advertising, Nintendo has recognized the power of influencer partnerships in expanding its reach and attracting new customers. By collaborating with prominent gaming influencers, Nintendo taps into their established fan bases, exposing its brand and products to a wider audience. These partnerships not only enhance brand visibility but also generate authentic excitement and trust among consumers, leading to higher engagement and conversion rates.

The upcoming release of Pokémon Brilliant Diamond and Shining Pearl for the Nintendo Switch in November 2021 is a testament to Nintendo’s continuous evaluation and adaptation of its marketing strategies. By leveraging the anticipation and hype surrounding this highly anticipated game, Nintendo can further evaluate its digital marketing tactics and engage with its passionate fan base.

Engaging the Gaming Community

In addition to digital marketing efforts , Nintendo actively engages with its fan base by organizing gaming events and tournaments. These events provide a platform for gamers to showcase their skills, connect with other players, and experience the latest Nintendo games and consoles firsthand. By fostering a sense of community and loyalty, Nintendo strengthens its relationship with gamers and creates ambassadors who spread positive word-of-mouth, further enhancing the company’s brand image and customer base.

Nintendo’s commitment to innovation, evident in products like the portable yet powerful Nintendo Switch, has played a pivotal role in maintaining its position at the forefront of the gaming industry. By consistently pushing the boundaries of gaming technology, Nintendo captivates not only casual gamers but also enthusiasts, expanding its target audience beyond children and young adults.

Overall, Nintendo’s effective utilization of digital marketing tactics, such as social media marketing, online advertising, and influencer partnerships, has contributed to its continued success as a leading player in the gaming industry. By engaging with its audience through various online channels and events, Nintendo fosters a strong sense of connection and loyalty, ensuring its relevance in the ever-evolving digital landscape.

Nintendo employs a diverse range of distribution channels to ensure widespread availability of its products to consumers worldwide. By strategically partnering with third-party distributors and retail stores, as well as leveraging online marketplaces and their official website, Nintendo effectively reaches its target audience and meets their gaming needs.

One key aspect of Nintendo’s distribution strategy is the establishment of strong retail partnerships. Collaborating with well-known retailers such as GameStop, Walmart, and Best Buy allows Nintendo to showcase its products in physical stores, making them easily accessible to customers. These retail partnerships not only enhance visibility but also provide a convenient and familiar shopping experience for gamers of all ages.

In addition to physical retail stores, Nintendo also recognizes the growing importance of online marketplaces. Platforms like Amazon and eBay serve as significant distribution channels for Nintendo, enabling customers to purchase their favorite Nintendo products with just a few clicks. Embracing these online marketplaces ensures that Nintendo stays aligned with the ever-evolving digital landscape and caters to the preferences of modern consumers.

Furthermore, Nintendo’s official website plays a vital role as a distribution channel. The company offers a seamless online shopping experience, allowing customers to browse, select, and purchase products directly from their website. This direct-to-consumer approach not only gives Nintendo full control over the purchasing process but also enables them to provide exclusive offers, bundles, and promotions to their loyal fanbase.

To visually represent Nintendo’s distribution channels, the following table showcases their global presence and reach:

By employing a wide range of distribution channels, including retail partnerships, online marketplaces, and their official website, Nintendo ensures that its products are accessible to gamers around the world. This strategic approach enables Nintendo to expand its market reach, generate higher sales revenue, and continue its reign as a leading player in the video gaming industry.

Nintendo has successfully employed a range of promotional campaigns to bolster their brand value and captivate consumers. By incorporating strategic online ads and leveraging the power of social media marketing, the company has effectively reached a vast audience and generated significant buzz around their products.

One noteworthy aspect of Nintendo’s promotional approach is their focus on inclusive and family-friendly marketing. This emphasis allows them to position their brand as suitable for players of all ages, expanding their target audience and appealing to a diverse group of consumers.

Throughout the years, Nintendo has utilized various promotional tactics to create exclusivity and excitement among their customer base. One prominent strategy is the release of limited edition consoles and games, employing artificial scarcity to generate hype and make their products highly sought after. This approach has proven successful in cultivating a sense of exclusivity and driving up demand for their offerings.

Nintendo’s promotional campaigns extend beyond traditional advertising methods. The company actively collaborates with influencers and YouTubers to amplify their reach and create a buzz around their products. This strategic partnership not only enables Nintendo to tap into the influencer’s dedicated following but also builds credibility and authenticity with consumers.

Furthermore, Nintendo has a strong legacy of captivating consumers with their iconic franchises such as Super Mario and The Legend of Zelda. These beloved franchises have played a significant role in building a strong brand identity and serve as powerful promotional assets that generate anticipation and excitement among fans.

By combining the portability of a handheld console with the power of a home console, the Nintendo Switch has revolutionized the gaming experience. This unique feature enhances user experience and serves as a prime selling point in Nintendo’s promotional campaigns.

Looking back, Nintendo’s marketing history is filled with memorable promotional campaigns. From the “Play It Loud!” campaign in the 90s, which targeted teenage boys with its edgy and daring approach, to the more recent “Best Play Here” campaign, aimed at engaging children and adults, Nintendo has consistently pushed the boundaries of traditional marketing practices.

Innovation Driven by a Rich Legacy

Nintendo’s success in the gaming industry can be attributed to its continuous innovation and the strong emotional connection it has established with its fans. Throughout its rich legacy, Nintendo has consistently pushed the boundaries of gaming technology and introduced groundbreaking consoles and franchises that have captivated gamers of all ages.

One of the key factors contributing to Nintendo’s success is its ability to create iconic characters and franchises that resonate with players on a deep level. From the beloved plumber Mario to the legendary hero Link in The Legend of Zelda series, Nintendo has created a roster of memorable and enduring characters. These characters have become cultural icons and are at the heart of the emotional connection that fans feel towards the brand.

In addition to its iconic characters, Nintendo has a long history of introducing innovative consoles that have revolutionized the gaming industry. The Game Boy, launched in 1989, was the first portable handheld gaming system with interchangeable game cartridges, allowing gamers to play their favorite games on the go. This innovation changed the landscape of gaming and made Nintendo a household name worldwide.

Furthermore, Nintendo’s commitment to innovation can be seen in its recent console releases. The Nintendo Switch, with its unique hybrid design that allows players to switch between handheld and home console modes, has achieved remarkable sales figures. Its versatility and innovative features have captured the attention of both old and new generations of gamers.

By combining innovation with a focus on creating memorable gaming experiences, Nintendo has been able to establish a strong emotional connection with its fans. Players not only enjoy the innovative gameplay and graphics but also feel a sense of nostalgia and joy when engaging with Nintendo’s games and consoles.

The Heart (Purpose and Values)

Nintendo, founded in 1889 in Kyoto, Japan, has a clear mission – to create smiles through unique entertainment experiences. This purpose drives Nintendo’s strategic decisions and shapes its brand identity and marketing efforts. By focusing on creating joy and happiness for their audience, Nintendo has established itself as a pioneer in the gaming industry, revolutionizing gaming with iconic franchises like Super Mario and The Legend of Zelda.

Unlike its competitors, Xbox and PlayStation, who primarily target a more mature gaming audience with a focus on technology and graphics, Nintendo positions itself as a family-friendly brand, appealing to children and young adults. Nintendo has consistently fostered emotional connections with consumers by creating and maintaining beloved characters like Mario, Zelda, and Pokémon, tapping into nostalgia and generating a devoted fan base.

Throughout its history, Nintendo has constantly introduced innovative gaming consoles to differentiate itself in the market. From the motion-controlled Wii to the portable-home console hybrid Switch, Nintendo continues to push the boundaries of gaming, bringing smiles to players of all ages.

At the heart of Nintendo’s purpose and values is the commitment to providing inclusive and enjoyable gaming experiences. They strive to make their games accessible to players of all skill levels, appealing to families and casual gamers. Parents trust Nintendo’s family-friendly content and positive themes, allowing them to feel comfortable allowing their children to play Nintendo games.

Nintendo’s dedication to quality in game and console development has built a reputation for excellence, attracting loyal fans and new customers. Their marketing strategies focus on creating fun, nostalgic, and innovative games, while leveraging recognizable characters like Mario and Zelda to reinforce their brand identity. Nintendo employs an effective marketing mix that incorporates the 4Ps (Product, Price, Place, Promotion) to reach a wide range of consumers.

With a focus on affordability, competitive pricing, bundle deals, discounts, and promotions, Nintendo’s pricing strategy ensures their products are accessible to a global audience. Nintendo’s products are available through various distribution channels, including retail stores, online marketplaces, and official Nintendo stores.

By utilizing advertising, social media, sponsorships, and their distinctive brand identity, Nintendo effectively promotes their games and consoles. Their aim is to deliver smiles not only to their consumers but also to their partners and employees throughout the Americas.

Overall, Nintendo’s purpose and values form the foundation of their success. Through their commitment to creating smiles through entertainment experiences, they continue to captivate and delight gamers around the world.

The Head (Positioning and Strategy)

Nintendo has carefully crafted its brand positioning to establish itself as a leader in the gaming industry. With a focus on family-friendly gaming, Nintendo has successfully created a unique and versatile console that appeals to gamers of all ages. By prioritizing fun and community, Nintendo has solidified its position in the market and captured the hearts of millions of players worldwide.

One of the key factors behind Nintendo’s success is its commitment to providing enjoyable gaming experiences for the whole family. The Nintendo Switch, with its innovative design and portable nature, allows players to connect and play together both at home and on the go. This emphasis on inclusivity and shared experiences has resonated with consumers, resulting in over 84 million units of the Nintendo Switch sold worldwide as of June 2021.

In addition to its hardware, Nintendo has curated a lineup of family-friendly games that prioritize fun and creativity. By offering games with age ratings of 3+ and focusing on immersive worlds and engaging storytelling, Nintendo ensures that its games can be enjoyed by players of all ages.

Furthermore, Nintendo has positioned itself as a brand that values community. Through its Nintendo Switch Online subscription service, players can connect with friends, join multiplayer games, and access exclusive content. This focus on building a community of gamers creates a sense of belonging and further strengthens the bond between Nintendo and its customers.

Nintendo’s brand positioning is distinct from its competitors, such as Xbox and PlayStation, which target a more mature audience. By prioritizing family-friendly gaming and appealing to players of all ages, Nintendo has carved out a unique space in the market. This strategy has paid off, with the Nintendo Switch generating over $1 billion in sales in Japan alone in 2020.

Looking ahead, Nintendo has significant growth potential in the market. Its strong brand positioning and focus on fun and community have positioned it as a top player in the gaming industry. With its versatile and family-friendly gaming experiences, Nintendo continues to capture the hearts of gamers worldwide and solidify its position as a leader in the industry.

In conclusion, Nintendo’s marketing strategy has been pivotal in establishing itself as a household brand name and shaping the future of the gaming industry. Through their deep understanding of the target audience and effective utilization of digital marketing tactics, strategic product positioning, pricing strategies, distribution channels, and promotional campaigns, Nintendo has emerged as a leader in the industry.

Nintendo’s ability to create unique and immersive gaming experiences while fostering an emotional connection with fans has contributed to its enduring success. By focusing on fun, community, and inclusivity, Nintendo has successfully catered to a wide audience, emphasizing their “Play Together, Anytime, Anywhere” concept and showcasing the joy and social connections that gaming can bring.

The iconic branding elements of Nintendo, such as Mario, Link, and Pikachu, have become pop culture icons, evoking nostalgia and building a deep emotional bond with their audience. The company’s commitment to creating hardware that is inviting and approachable, with the seamless transition between handheld and docked modes, has enhanced accessibility and portability, providing a comfortable gameplay experience.

With over 85 million units sold since its launch in 2017 and the introduction of the Nintendo Switch Lite, Nintendo has expanded its reach and revenue potential. Their digital market presence has been strengthened by the Nintendo Switch Online service, which has attracted millions of subscribers worldwide. Moreover, the revenue generated through various digital content and services has proven to be a lucrative revenue stream.

As Nintendo faces challenges in the ever-evolving gaming landscape, the company will continue to embrace emerging trends and adapt its business model accordingly. With its established brand, innovative products, and loyal fan base, Nintendo is well-positioned to shape the future of gaming for years to come.

What is Nintendo’s history in the gaming industry?

Who is nintendo’s target audience, how does nintendo position its products in the gaming industry, what pricing strategies does nintendo employ, how does nintendo leverage digital marketing, what are nintendo’s distribution channels, how does nintendo promote its brand and products, what has contributed to nintendo’s success in the gaming industry, what is nintendo’s mission, how does nintendo position itself in the gaming industry, related posts:.

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How Nintendo Disrupted the Video Game Industry

This is a case study analysis i wrote for my strategy and competitive advantage course. it discusses how nintendo was able to disrupt the video game industry with its wildly successful wii console..

Chuma S. Okoro

The Nintendo case study can be used as an example of true innovation and disruptive strategic thinking for all technology-driven companies. Early on, Nintendo had much success in the entertainment space with their playing cards, toys, and their early consoles. They were even allied with the likes of Sony at first to support CD-ROMs.

Due to some disagreements between the organizations, they decided to work on their products separately. This was the start of a difficult period for Nintendo. According to the case study, “In 1995, Sony released the PS in the US, totally uprooting Nintendo’s established name in the industry”. Sony didn’t stop with the PS1, they took a first-to-market strategy with the next generation of the console, the Play Station 2. This approach led to the PS2 being the best-selling console in history. They also established themselves as a differentiation leader by trying to make their product all-encompassing. For example, according to the article, “The PS2 was not only backward-compatible with the PS, but could also be used to play CDs and DVDs”. By taking steps like this, Sony would be able to retain customers who purchased PlayStation games in the past and get the casual users who also needed a DVD player.

Microsoft, a new player to the video game industry took a few steps to change the dynamics of the video game industry. A notable action they took was to vertically integrate the parts for their console. According to the case study, Microsoft “abandoned its previous approach of using off-the-shelf parts provided by Intel and Nvidia to build its consoles”. This move helps to decrease the power of their suppliers to increase costs and, in turn, increase profit margins.

Another way Microsoft tried to change the dynamics of the video game industry was to make some moves to lower the competitors’ advantage in areas they traditionally had one. This includes having Japanese-style games and the first-mover advantage in the new release cycle. Microsoft worked with Japanese game producers and also released their consoles earlier than normal.

Nintendo took a look at the way their competitors were trying to improve their product and created some discontinuity. The organization decided to take an approach that leveraged some aspects of differentiation and cost leadership. They recognized that many of their competitors only focused on existing customers. Instead of following suit, the people at Nintendo decided to focus on new customers and non-gamers. By doing this, they were able to engage a completely new customer base. They focused on easy-to-learn games like sports and added a fitness component to their consoles. According to the case study, between November 2006 and June 2008, Nintendo was able to sell 10.9 million Wiis. This led both the PS3 and the Xbox360 in number of units.

Not only was their differentiated system popular, but it was also cost-efficient. Nintendo had a strategy for having multiple suppliers for many parts of their console. This gave them room to negotiate on some items and bring their prices down. In addition, they merged their hardware and software development for their game systems. By doing this, they were able to bring their costs down and be profitable on every console they sold. Sony and Microsoft took losses on every system and hoped they would make more on the backend from software sales.

Many lessons can be taken from this case on effective approaches to develop and commercialize a technology-based product. The first and most obvious is to not tunnel yourself to the existing market. A core tenet of technology is to innovate and solve problems. Nintendo saw a landscape of people with some leisure time who cared about fitness but were not being served by the ever-growing in complexity of games. Instead of increasing the complexity or graphics like all their competitors, they focused on the underserved market. Technologists can use this approach in other problem spaces as well.

Another lesson that could be taken from this case study is to listen to the customer. Many people are frustrated that when they purchase a console, they have to spend more money just to use it. Nintendo saw that and built a console paired with some games built into the initial price. By doing this, they addressed an underserved customer need and found success.

Sources: “Nintendo’s Disruptive Strategy: Implications for the Video Game Industry” — https://hbsp.harvard.edu/product/HKU814-PDF-ENG

Written by Chuma S. Okoro

Sr. Software Engineer @ Bloomberg. I love talking about technology and business. Every article has my opinion backed by my experience, education, and research.

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Extensive SWOT Analysis of Nintendo – Detailed Explanation & Highlights

By Aditya Shastri

Earlier we delved into the SWOT Analysis of Sony Corporation , a Japan based globally renowned electronics company. This time, we’ll take a look at the SWOT Analysis of Nintendo and dive deep into the company’s workings.

Nintendo is the leading video game creator and hardware manufacturer. Their TV and mobile-connected consoles, as well as their games, have raised the standard for engaging families with fascinating and difficult games. 

Nintendo has extensively profited from their marketing efforts. Marketing is an evolutionary concept. Majority of successful campaigns now take place on digital media. Attend our Free MasterClass on Digital Marketing 101 , hosted by Karan Shah, CEO and Founder of IIDE, to discover more about today’s effective marketing. 

To better understand the route behind Nintendo’s continued expansion, let’s start with the company, its founding, financial status, products, and competitors using the SWOT analysis of Nintendo.

About Nintendo

Nintendo was founded in Kyoto, Japan, roughly 130 years ago as a toymaker, and they were noted for their pioneering attitude. Originally known as Nintendo Karuta, the firm was started by artisan Fusajiro Yamauchi who created handcrafted hanafuda playing cards. Nintendo released its first video game system, the Color TV-Game, in 1977, after branching into several fields of the industry during the 1960s and obtaining legal standing as a public corporation under the present corporate name.

Nintendo Color TV-Game

Nintendo contributed to the growth of the computer gaming industry and continue to build a name for themselves with startling and inventive goods. Nintendo’s Game Boy, Wii, Nintendo DS, Nintendo 3DS, and Nintendo Switch consoles are among the most popular in the business. 

Nintendo has a branch in Europe that was founded in 1990 and operates offices in the United Kingdom, France, Sweden, and Germany, among other places.

Products of Nintendo

These are the products produced and sold by Nintendo:

• Toys & Cards
• Home Video Game Consoles
• Portable Video Game Consoles
• Video Games

Competitors of Nintendo

Following are the few major competitors of Nintendo:

• Activision Blizzard
• Electronic Arts

SWOT Analysis of Nintendo

1. Strengths of Nintendo

Let’s start with the S of the SWOT Analysis of Nintendo – Strengths. These are the internal factors that have contributed to Nintendo’s constant growth and reputable status.

• Extensive distribution network – By having its presence worldwide, Nintendo has built an extensive distribution network. By possessing this extensive distribution network has helped the company to increase its sales as well as grow its market share.
• Broad variety of games – The company has developed a huge variety of games like adventure, sports, simulation etc which caters to the needs of all types of gamers. During the coronavirus pandemic, they had developed a game called Animal Crossing which was one of the most popular games.
• Strategic partnership – Nintendo’s partnership with Disney to produce various products in Japan not only benefited both the companies but also helped Nintendo to be listed on Kyoto and Osaka stock exchanges.
• Competitive pricing – During the launch of their products Nintendo launches them at an expensive price but to attract more customers they reduce the prices of their products this helps them to compete with the free games available on mobile phones, as well as on gaming consoles.
• Decades of experience – Nintendo having been launched more than 130 years ago has been a popular choice among gamers for the types of games they develop, they have the proper experience of understanding the wants and needs of their customers by developing the best products consistently.

2. Weaknesses of Nintendo

The Weaknesses of Nintendo’s SWOT are what puts the company at a disadvantage in some aspects. They are also internal factors that the company can control and work on. 

• Slow response to demand – During the coronavirus pandemic, when the lockdowns were imposed worldwide demand for Nintendo’s products increased drastically especially their popular gaming console Nintendo Switch. But Nintendo didn’t keep supplying the products consistently which led to worldwide shortages and stock out’s on various E-commerce platforms.
• Product failure – Wii U a gaming console launched by Nintendo did not succeed in the market for a variety of reasons such as the product was extremely overhyped, the product being inconsistently marketed, it was manufactured with low-quality components and it was extremely overpriced. The launch of Wii U by Nintendo tarnished the company’s reputation.
• Over-Reliance on developed economies – Nintendo pretty much relied a lot on developed countries like Australia, Japan, South Korea without knowing the saturated nature of these economies due to the presence of several companies competing for market share, by over-reliance on developed led the company to under rely on developing countries.
• Overdependence on switch – Switch, one of the most popular gaming platforms launched by Nintendo helped them generate more than 50% of their revenue in the year 2020 which amounted to about 8.8 billion dollars. But the company only focused on Switch leaving aside their other products which could harm the company financially, if the switch loses its popularity in the coming days the company will face a lot of financial repercussions.

• Growth of counterfeit products – One of the main reasons for the rising availability of counterfeit products of Nintendo are that the company does not enforce intellectual property rights in some regions so others take advantage of the situation and manufacture and sell counterfeited products of the company which tarnishes the company’s reputation and image.

3. Opportunities for Nintendo

Now we’ll dive into the O of the SWOT analysis of Nintendo. Here, we will grasp the possible options that would place Nintendo at a competitive advantage. Opportunities are external circumstances that pose the company with a  favourable environment.

• Diversify offering – Nintendo has a diversified product catalogue with a large variety of consoles, games and other products. Nintendo can enhance the diversity of their products as they have numerous wholly-owned subsidiaries worldwide who can create new products and services to enhance the product diversity and increase their product catalogue to cater to the latest demands of customers.
• Invest in mobile games – As the number of global mobile users are increasing, so are the number of people who like to play mobile games. Statistics tell that by the year 2022 the global mobile games market is to make around $94.5 billion. Nintendo can take advantage of this lucrative opportunity by developing mobile versions of its popular games.
• Focus on emerging markets – Nintendo should start focusing on countries whose economies are emerging like China, India as it can be a great move to increase their reach and have increased profits for the company as they will be to find a new customer base who will buy their products and services, as they have already made their market share in USA, Japan, Australia they should focus on emerging markets.
• Adopt Virtual reality – As there is advanced technology coming into the world companies should make full use of it. Nintendo can integrate virtual reality in some of its most popular games by providing a VR headset along with their gaming consoles as it can enhance the experience of gaming and provide a realistic touch to gamers.
• Enhancing online gaming – Nintendo can integrate online gaming in some of its most popular games, as already some of Nintendo’s competitors like Electronic Arts and Activision have integrated it in their games by doing so Nintendo can give a tough competition to its competitors.

4. Threats to Nintendo

Last under the SWOT Analysis of Nintendo are the Threats. These are external elements that disrupt the strategies and workings of the company, putting it at a disadvantage. 

• Technological revolution – As internet penetration is increasing rapidly worldwide, tech giants like Google and Amazon are trying to increase their customer base by acquiring online gaming platforms which are also taking over the market share of Nintendo, so Nintendo must adapt to changing technology.
• Stronger substitutes – As the world is evolving so is the gamers preferences, a lot of gamers are shifting from gaming consoles to online gaming platforms as well as to mobile consoles, so Nintendo must take appropriate actions and make sure that they are adapting to the market trends as they change.
• Stiff competition – As there are a lot of companies in the gaming sector so there is stiff competition among brands, companies like Sony, Amazon, Electronic Arts, SEGA with each of the brands having their gaming consoles and games competition is increasing on a day to day basis.
• Increased Piracy – With the advent of the internet there has been an equal number of good and bad benefits from it. One of those is piracy, piracy impacts any brands a lot like the products of the brand are available at lower cost, similarly, Nintendo’s games are pirated wherein the cheaper full version of the games are available in the market which affects the brand.
• Shifting demographics – The places where Nintendo had already made their market share like Europe, wherein their market share is decreasing due to ageing population as the youths of these regions are declining so they will have to shift to regions which have a higher youth population.

With this, we conclude the SWOT Analysis of Nintendo. This detailed study helps companies and their customers know where they stand in the market. In the following section, let’s briefly conclude the takeaways of this analysis. 

Nintendo has gained immense popularity and is one of the most important companies in the world. Despite facing a lot of competition they have become the market leader and have stood the test of time. Nintendo’s success can be reiterated by its market segmentation and innovation. Its broad variety of games, smart pricings and strategic partnerships place them on the top. However, Nintendo should focus on improving its market reach by tapping into the mobile gaming market. 

Additionally, when Nintendo ups their digital marketing strategies, they will gain not only from its cost-effectiveness, but will also reach a larger audience than normal via various channels such as SEO, emailing, content marketing, and social media marketing. 

Mastering the specifications of digital marketing will pose opportunities to work with major corporations like Nintendo. IIDE’s short-term certification courses covering the broad spectrum of digital skills can get you up to speed in less than a week. These courses will teach you about social media marketing, media strategy, search engine optimization and more.

Check out our IIDE Knowledge portal for detailed corporate analysis. Thank you for taking the time to read this SWOT Analysis of Nintendo. Don’t forget to leave your thoughts regarding this study in the comments section below.

Author's Note: My name is Aditya Shastri and I have written this case study with the help of my students from IIDE's online digital marketing courses in India . Practical assignments, case studies & simulations helped the students from this course present this analysis. Building on this practical approach, we are now introducing a new dimension for our online digital marketing course learners - the Campus Immersion Experience. If you found this case study helpful, please feel free to leave a comment below.

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Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs...... [Read full bio]

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Case Study: Sony

This scholarly case study looks at Sony's participation in the video game industry. Sony provides an example of marketing strategy and strategic positioning of its products in a highly competitive global environment. It illustrates the need for industry competitive data analysis, demographic segmentation, product features, product positioning, and the magnitude of marketing decisions faced by multinational companies. 

Sony's Battle for Video Game Supremacy

The rise of nintendo.

Kyoto, Japan-based Nintendo began as a playing-card manufacturing company. After diversifying into various kinds of electronics in the 1970s, Nintendo entered the home video game market in Japan in 1983 with its Famicom system. In an effort to avoid the quality issues that had plagued other game consoles, Nintendo focused on producing fewer, but higher quality games. The Famicom could display 52 colors at a resolution of 256x240 pixels, superior to the competition of the day. Launched at 24,000Y ($100), the Famicom cost 50% less than the closest competitor.

All games that were produced for the Famicom (known as the Nintendo Entertainment System in the United States) had to go through Nintendo's approval process in order to receive the Nintendo "Seal of Quality". A security chip was installed into every console to ensure that only Nintendo-approved games could be played on the system. Manufacturing of the Famicom was subcontracted out to numerous companies. Wary of giving any one manufacturer too much information about the overall production process, Nintendo used up to 30 different suppliers and completed final assembly of the system at its own production facility.

Due to its popularity, Nintendo licensed out the development of games. Nintendo charged licensees 20% of the 6,000Y ($30) wholesale price for every game sold. In addition, licensees had to pay the manufacturing costs of the system in advance, with a 10,000 unit minimum order. Once Nintendo entered the U.S. market, in 1985, the minimum order was raised to 30,000 units. Nintendo also added an exclusivity clause that prevented licensees from producing games on competing consoles for two years. Companies such as Namco, one of the first licensees, complained that Nintendo's monopoly over the market was hurting the industry, but eventually backed down and agreed to Nintendo's terms.

Nintendo had a tight grip on retailers as well, requiring them to place orders, take delivery, and pay in a matter of months, as opposed to the year time-frame they were used to. The company also exercised strict inventory management, quickly removing games that were not selling well and, at times, restricting supply to maintain the appearance of scarcity. Atari filed a number of lawsuits against Nintendo contending the company used monopolistic practices to shut out competitors including withholding merchandise from retailers that sold competitors' products or attempted to discount the price of the system.

By 1990, with hit titles such as Super Mario Bros. and The Legend of Zelda, Nintendo represented more than 90% of the U.S. home console market. Approximately 30 million NES units had been sold, about one for every three American households.

Nintendo's next system, the Super Nintendo launched in September 1991, did not capture the market like its predecessor. Super Nintendo's lack of backwards-compatibility prevented Nintendo from taking full advantage of its existing catalog of games. Meanwhile, Sega, another Japanese home console manufacturer, had successfully entered the U.S. market two years earlier with the Sega Genesis console and effectively fought Nintendo to a draw. Strong internal game development at Sega coupled with relatively favorable terms for software licensees (in comparison to Nintendo) paved the way for an extremely competitive library of titles for the Sega Genesis.

By the mid-1990s, Sega was the least of Nintendo's worries as Sony entered the video game market with a bang.

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Nintendo Case Study

The pull of nostalgia:, engaging consumers with childhood favorites.

To illustrate the value of brand tracking, we analyzed the impact of Nintendo’s nostalgia-driven product development and marketing in late 2021 and early 2022 on their brand equity. In this case study, we see how the gaming giant’s decisions echo players’ youth to generate ongoing enthusiasm for the Nintendo brand. How did their decisions impact their brand equity? Download our brand tracking case study to find out !

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7 Powerful Blue Ocean Strategy Examples That Left the Competition Behind

Written by The Blue Ocean Team

Why are some companies able to create ‘blue oceans’ of uncontested market space while others struggle in ‘red oceans’ of intense competition?

To answer this question, we need to look at some examples from a range of industries and identify the specific strategic actions blue ocean companies took to achieve profitable growth.

We’ll examine blue ocean strategy examples from the tech, healthcare, fintech, and retail industries and a classic blue ocean example from the entertainment industry.

We’ll also take an in-depth look at how one company made the spectacular transformation from the red ocean to the blue ocean .

History reveals that there are no perpetually excellent companies. The same company can be brilliant at one moment and wrongheaded at another. It would appear, therefore, that the company per se is not the appropriate unit of analysis when exploring the roots of high performance.

In their bestselling book, Blue Ocean Strategy , Professors Chan Kim and Renée Mauborgne write:

The strategic move, and not the company or the industry, is the right unit of analysis for explaining the creation of blue oceans and sustained high performance.

A strategic move is the set of managerial actions and decisions involved in making a major market-creating business offering.

The following blue ocean strategy examples all highlight strategic moves that delivered products and services in a way that opened and captured new market space, with a significant leap in demand.

1. Marvel – a super-powerful blue ocean strategy example

2. Nintendo ’s switch to a blue ocean

3. Stitch Fix – a blue ocean example in the fashion retail industry

4. HealthMedia – a blue ocean strategy example in healthcare

5. Nickel – a blue ocean in the fintech industry

6. Yellow Tail – a blue ocean example in the wine industry

7. Cirque du Soleil – a classic example of blue ocean strategy

Let’s jump right in, starting with one of the most extraordinary blue ocean turnarounds in corporate history.

Marvel – a super-powerful example of moving from a red ocean to the blue ocean

Unless you’ve been living under a rock for the last 50 years, you have certainly heard of Marvel, or at least, you’ll be familiar with Marvel characters such as Spiderman, The Hulk, and many others. What you may not know is that Marvel is an example of one of the great red ocean to blue ocean transformations in modern business history.

Consider the big movies of the last decade. Year after year, Marvel movies have smashed their way to the top of the earnings charts. The Avengers, Age of Ultron, Infinity War, Endgame, and Black Panther are the five highest-grossing superhero films of all time, accounting for half of the lifetime top-ten grossing films of any genre. In fact, Endgame is the highest-grossing movie ever. All were produced by Marvel.

Things were not always so bright for Marvel, however. Just over two decades ago, the firm emerged from bankruptcy saddled with USD $250 million of high-interest debt, a decimated sales channel, disgruntled customers, and a skeleton staff of employees. Cash flow was so tight they struggled to make payroll.

The early years of Marvel

Founded in 1939 as a comic book company, Marvel plodded along in its first few years at a time when superheroes had fallen out of fashion. Their only well-known character was Captain America, invented specifically to encourage Americans to support WWII. By the 1960s, Marvel’s unoriginal, ‘me-too’ comic book division was almost closed down. It was at this point that three middle-aged men – Stan Lee, Jack Kirby, and Steve Ditko – decided to build a new type of superhero, one that was human first and superhero second.

Rather than aim for the existing comic buyers, who were children, Marvel created new, more complex characters that appealed to college students – noncustomers of the comic book industry up to this point. From 1960 to 1964, the company introduced Spider-Man, Iron Man, The Hulk, The X-Men, and many other characters – about 8,000 in all. Marvel saw its comics business thrive.

All this was to change in the 1980s when Marvel’s new owners took a red ocean approach that sucked all the value out of the brand. During this time, management pocketed hundreds of millions of dollars while decimating Marvel’s staff and retail channels, leaving customers alienated and confused. Eventually, the business went bankrupt.

Marvel took a blue ocean turn by focusing on noncustomer college students. Marvel invented characters that were people first and superheroes second: Spider-Man, The Hulk, Iron Man, the X-Men.

Marvel’s blue ocean strategic move

In 1999, Peter Cuneo, a world-renowned turnaround expert, was appointed CEO of Marvel. He is credited with taking Marvel from bankruptcy to being acquired by Disney for over $4 billion in just over a decade.

Cuneo and Marvel’s most vital blue ocean strategic move was entering the motion picture industry, a blue ocean strategic pivot that saw the company roar back to success in the 21 st century in the form of Marvel Studios.

Not only that but Marvel and Cuneo transformed the whole movie production model; that is, it fundamentally changed how a movie is made. Marvel’s strategic move saw it not only enter a new field but reconstruct that field to open a blue ocean.

How Marvel broke the value-cost trade-off

Many in the business world hold to the conventional belief that companies can either create greater value to customers at a higher cost or create reasonable value at a lower cost. Viewed this way, strategy is seen as making a choice between differentiation and low cost, a value-cost trade-off. It’s the mindset of a red ocean strategist.

Marvel, on the other hand, took a blue ocean approach, pursuing differentiation and low cost simultaneously. To get a better understanding of how this works, let’s review Chan Kim and Renee Mauborgne’s Four Actions Framework .

To break the trade-off between differentiation and low cost, the framework poses four key questions to challenge an industry’s strategic logic:

• Which factors that the industry takes for granted should be eliminated ?
• Which factors should be reduced well below the industry’s standard?
• Which factors should be raised well above the industry’s standard?
• Which factors that the industry has never offered should be created ?

Marvel’s ERRC Grid

© Chan Kim and Renée Mauborgne. Blue Ocean Strategy. Blue Ocean Shift. All rights reserved.

The Eliminate-Reduce-Raise-Create (ERRC) Grid above shows how Marvel was able to break the value-cost trade-off, i.e., strategic actions that created unprecedented value at low cost.

The Marvel blue ocean example illustrates how a company used differentiation and low cost to restore its blue ocean business. By entering the motion picture industry and value innovating the motion picture production model, Marvel restored its blue ocean to become the most profitable movie franchise in history.

To learn more about how Marvel created a blue ocean, check out The Marvel Way: Restoring a Blue Ocean , a case that has won the 2020 Case Centre Award for Strategy and General Management.

Nintendo’s switch to a blue ocean

Nintendo, the Japanese video game company created its first console in 1977 and became internationally famous with the release of games Donkey Kong in 1981 and Super Mario Bros. in 1985. However, by the early 2000s, Nintendo was struggling as industry giants Sony and Microsoft dominated the market.

In 2006, the company took a blue ocean approach. Whereas Sony and Microsoft, with their expensive consoles, were running focus groups on gamers, Nintendo studied non-gamers. It Iooked at the gaming industry’s noncustomers and reconstructed elements across market boundaries to create the Wii – a console based on simplicity, functionality, and interactivity, with games that dramatically raised utility for these noncustomers.

Nintendo eliminated or reduced factors that were thought to be vital in the market – high-definition graphics and sound, fast chips, controllers with many buttons, and violent lifelike games, and so on. At the same time, it raised and created factors that appealed to noncustomers such as more approachable games, a focus on fun rather than computing power, and intuitive controls.

As a result of applying blue ocean strategy, the Nintendo Wii opened up a new market pulling in traditional non-gamers and outselling all Sony and Microsoft gaming products combined. It was a huge success until the unforeseen and dramatic technological disruption that came with the introduction of smartphones and tablets.

Fast forward to March 2017 and Nintendo offers up another blue ocean strategy example with the Nintendo Switch. Answering a growing demand for simple games such as the free downloadable ones on their smartphones, Nintendo created a brand-new blue ocean with the Nintendo Switch. Instead of competing with the expensive and high-end processing power of PlayStation 4 or Xbox One, the Nintendo Switch was a small device that allowed users to play games on a TV and on the go, connecting seamlessly between one device and the other.

By 2018, it had become the fastest-selling home video game system of all time in the U.S. and outsold every other console over Christmas that year. Nintendo had reconstructed market boundaries with the Switch capturing the best of high-powered game consoles and smartphone games.

Explore in-depth the blue ocean strategy examples of Nintendo Wii and Nintendo Switch.

Stitch Fix – a blue ocean example in the fashion retail industry

Stitch Fix is a blue ocean example in the fashion retail industry. The youngest female CEO to ever lead a US initial public offering, Katrina Lake created a new market space in the highly competitive fashion retail industry. Stitch Fix is a personal styling company that mails its customers boxes of stylish, carefully selected clothing. It’s as if customers had their own personal stylists. In 2019, Stitch Fix generated $1.5 billion in revenue from their ever-growing 3 million+ customers. While most retail companies are suffering, Stitch fix is soaring.

Stitch Fix combined artificial intelligence and human interaction to create a differentiated and low-cost offering that women have been going crazy for. Katrina Lake created this new market space, combining the best of technology, human creativity and ingenuity in its products.

Stitch Fix was founded by a woman and, with 86% of female employees, the company has one of the largest female workforces in the AI space, if not across almost all industries.

To learn how Stitch Fix created a blue ocean in the retail industry, read the blog “ Stitch Fix: A Blue Ocean Strategy in Retail “.

HealthMedia – a blue ocean strategy example in healthcare

HealthMedia is a blue ocean strategy example of looking across strategic groups within an industry to create a blue ocean.

HealthMedia, a player in the industry with a revenue of US$6 million, was drowning in a red ocean of intense competition. At the time, the industry had two strategic groups, one offering telephonic counseling predominantly for severe medical conditions, the other offering generic, digitalized content like you find on WebMD.

HealthMedia explored why buyers traded across these strategic groups and found that despite all the factors players competed on, buyers traded up to telephonic counseling for one overriding reason – high efficacy – while they traded down to digitized content for low cost.

HealthMedia created a new market space called digital health coaching which combines the far lower cost of digitalized content with a leap in efficacy through interactive online questionnaires that digitally matched people’s self-reported challenges with a health plan that would work best for them.

Within just two years, HealthMedia had created a blue ocean so compelling that Johnson and Johnson swooped in and purchased the company for US$185 million.

The HealthMedia case study is analyzed in detail in New York Times and #1 Wall Street Journal bestseller Blue Ocean Shift .

Viagra is another example of blue ocean strategic move in the healthcare industry. Read how Viagra created a blue ocean in lifestyle drugs .

Nickel: Driving Sustainable Growth and Empowering Society

French fintech Nickel found a blue ocean in the crowded French retail banking sector by identifying noncustomers and developing a strategy to attract them.

The typical banking experience in France is notoriously tedious. You need to make an appointment and talk with a bank manager, then provide a handful of documents to open an account. It is costly to maintain an account that is linked with diverse yet mostly irrelevant financial services.

A French entrepreneur, Hugues Le Bret, saw hidden pain points that customers and noncustomers accepted as given when using banking services. So he created Nickel, a simple and convenient banking service at low cost that looked beyond current bank customers and reached low-income earners and other people excluded by legacy banks.

Founded in 2014, the company has quickly become one of the leading fintech startups in France until it was successfully sold to BNP Paribas for over 200 million euros in 2017.

While traditional banks focused on developing financial technology to make their offerings more appealing, the fintech Nickel created a blue ocean by looking at the noncustomers the other banks ignored: low-income earners and people facing financial exclusion.

If you’re interested to learn more about Nickel’s blue ocean and how it went from a startup to achieving strong profitable growth, check out this case: Driving Sustainable Growth and Empowering Society: Nickel’s Blue Ocean Beyond Disruption

Yellow Tail – a blue ocean example in the wine industry

Casella Winery’s Yellow Tail – or [yellow tail] as it’s written – is often cited as a classic example of blue ocean strategy. Let’s look at how the company created a blue ocean in the highly competitive US wine industry.

Up until 2000, the United States had the third-largest aggregate consumption of wine worldwide with an estimated $20 billion in sales. Yet, despite its size, the industry was intensely competitive.

The US wine industry in 2000 faced intense competition, mounting price pressure, increasing bargaining power on the part of retail and distribution channels, and flat demand despite overwhelming choice.

In July 2001, Australia’s Casella Winery introduced [yellow tail] into this highly competitive US market. Small and unknown, they had expected to sell 25,000 cases in their first year. In fact, they had sold nine times that amount. By the end of 2005, [yellow tail]’s cumulative sales were tracking at 25 million cases. [yellow tail] soon emerged as the overall best-selling 750ml red wine, outstripping Californian, French and Italian brands.

How did [yellow tail] become the number one imported wine and the fastest-growing brand in the history of the US and Australian wine industries?

The traditional strategy of most wineries has always been to compete on the prestige and the quality of wine at a particular price point. Prestige and quality are judged by things like the personality and characteristics of a wine, reflected in the uniqueness of the soil, the winemaker’s skills, the aging process, and so on.

Casella Wines turned this convention wisdom on its head. The Australian winery redefined the problem of the wine industry as how to make a fun and non-traditional wine that’s easy to drink. By looking at the demand side of alternatives of beer, spirits, and ready-to-drink cocktails, which captured three times as many consumer alcohol sales as wine, Casella Wines found that the mass of American adults saw wine as a turnoff. It was intimidating and pretentious, and the complexity of taste – even though it was where the industry sought to excel – created a challenge to the inexperienced palate.

With that insight, Casella was ready to challenge the industry’s strategic logic and business model. To do so it considered four key questions outlined in the blue ocean analytical tool, the Four Actions Framework .

The outcome of this analysis was [yellow tail], a wine whose strategic profile broke from the competition and created a blue ocean. Instead of offering wine as wine, Casella created a social drink accessible to everyone.

By looking at the alternatives of beer and ready-to-drink cocktails, Casella Wines created three new factors in the US wine industry – easy drinking, easy to select, and fun and adventure. It eliminated or reduced everything else.

[Yellow tail] was a completely new combination of characteristics that produced an uncomplicated wine structure that was instantly appealing to the mass of alcohol drinkers. The result was an easy-drinking wine that did not require years to develop an appreciation for.

This allowed the company to dramatically reduce or eliminate all the factors the wine industry had long competed on – tannins, complexity, and aging. With the need for aging reduced, the working capital required was also reduced. The wine industry criticized the sweet fruitiness of [yellow tail] but consumers loved the wine. Casella also made selection easy by offering only two choices of [yellow tail] – Chardonnay, the most popular white wine in the US; and red Shiraz. It also scored a home run by making wine shop employees ambassadors of [yellow tail], introducing fun and adventure into the sales process by giving the Australian outback clothing. Recommendations to consumers to buy [yellow tail] flew out of their mouths.

Let’s look at the Strategy Canvas of [yellow tail]. Developed by Chan Kim and Renee Mauborgne, the Strategy Canvas is a diagnostic and action framework for building a compelling blue ocean strategy. It quickly captures, in one simple picture, the factors an industry competes on and invests in, the offering level of each factor that buyers receive, and the strategic profile of a company and its competitors across the key competing factors.

The Strategy Canvas of Yellow Tail

The strategy canvas of [yellow tail] shows how its strategic profile breaks from the competitors in the US wine industry. © Chan Kim and Renée Mauborgne

[yellow tail] created a unique and exceptional value curve to unlock a blue ocean. As shown in the strategy canvas, [yellow tail]’s value curve has focus: the company did not diffuse its efforts across all key factors of competition. The shape of its value curve diverged from the other players’, a result of not benchmarking competitors but instead looking across alternatives. The tagline of [yellow tail]’s strategic profile was clear: a fun and simple wine to be enjoyed every day.

When expressed through a value curve, an effective blue ocean strategy has three complementary qualities: focus , divergence , and a compelling tagline .

Check out other powerful strategy canvas examples of companies like Apple or CitizenM.

To read more in detail about characteristics of good strategy read the strategy vs tactics blog where we describe it in-depth.

Cirque du Soleil – a classic example of blue ocean strategy

Arguably most well-known example of blue ocean strategy is Cirque du Soleil, a Canadian entertainment company that created uncontested market space and made the competition irrelevant. It appealed to a whole new group of customers: adults and corporate clients prepared to pay a price several times as great as traditional circuses for an unprecedented entertainment experience.

Cirque du Soleil is one of the flagship case studies in the Blue Ocean Sprint Online Course . Learn how Cirque du Soleil and others made the competition irrelevant by taking the course.

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Marketing Case Study #4: Nintendo & The Blue Ocean Strategy

4th case study will be about the Blue Ocean Strategy done by Nintendo in 2006 to be the number 1 in the market. Beating Sony & Microsoft, in terms of sales, even though they were selling more powerful video game consoles than Nintendo.

Let's see how they managed that but first, some context!

What Is Nintendo?

Well, Nintendo is probably known by most of you for its iconic games like Super Mario Bros., The Legend of Zelda, Mario Kart, or Metroid. For others, be aware that this Japanese company was established in 1889 in Kyoto! 任天堂 or Nin-Ten-Dô is commonly assumed to mean "leave luck to heaven" (not an official statement though).

They were first producing a card game called Hanafuda , only for the Japanese market. Only since 1956, has Nintendo started diversifying its activities to other industries like toy manufacturing, laser games, television, food, and love hotels...

It was only in 1974 that Nintendo started to get an interest in video gaming. In 1977, they finally produced their in-house hardware: The Color-TV Game and from there they kept creating video game consoles.

Behind the success of Nintendo, is a constant search for outdated technology that can still be relevant for gaming. This idea was to keep production costs at a minimum to be affordable for most people. That is how they came up with the idea behind the Game & Watch series, using LCD screens used in calculators to have the cheapest gaming system ever.

Followed by a series of successful consoles like:

• Game Boy Pocket/Color (then Advance but this is another story).

The popularity of Nintendo's consoles was highly based on their quality but also based on their price. As an example, when released in 1991, the SNES was priced at $199 while their competitor Neo Geo was priced at $699...

Nintendo vs Sega: the performance race

In the early 1990s, prices were kept around $200 and the focus was not on cost savings but on which company would bring the most performing console. Sega, another Japanese company, was competing against Nintendo for the title of video game leader. In fact, the Sega Genesis (or Megadrive in other places) was as powerful as the Nintendo SNES, and gamers were debating for years about which console was the more powerful.

Sony PlayStation The Conqueror

I will not go over the full story behind the PlayStation being first created by Nintendo (the prototype was sold recently, crazy!) but the fact is that since December 1994, Sony became the leader in gaming consoles by providing gamers what they wanted: more performance and outstanding graphics. This is due to the usage of CD-Roms instead of typical cartridges, allowing for more data and fast transfers.

From there Nintendo, still focusing on cost-saving performance consoles, will lose continuous market shares with the Nintendo 64 released in 1996 and the GameCube in 2001.

ready to take your business to the next level?

Get in touch today and receive a complimentary consultation., the early 2000s: nintendo's decline.

In 2001, times were hard. Sega , the eternal rival of Nintendo bankrupted after failing to find success with the Dreamcast , a powerful console with online gaming (too early, unfortunately) and Nintendo released the GameCube to compete with the new monster from Sony: the PlayStation 2 (PS2). More powerful and includes a DVD player (an insane feature in 2001... now way less!). Nintendo tried to keep up with the PS2 by being cheaper while providing great performances (the GameCube was at $199 & the PS2 at $299) but didn't expect 2 things:

• Microsoft wanted to join this market and released the X box the same year ( 2 months before the GameCube!) with a DVD player and certainly the best performances for this generation. Serious competition for Sony that is still going on almost 20 years after with the PlayStation 5 & the Xbox Series X!
• DVD player: quite useful and a good excuse to beg your parents to buy them!
• Strong performance: both these consoles have recognized strong CPU & GPU allowing them to provide outstanding graphics and sounds.
• Gamers seek mature content: in fact, Nintendo was considered to create consoles and games for kids (Mario, Zelda... too childish) while Sony & Microsoft proposed games that are considered more mature like Tomb Raider, Halo, God of War, and simulations like Pro Evolution Soccer, Gran Turismo, etc.

Nintendo was losing this game that they had owned for so long, the strategy had to be changed, and maybe the market as well...

The Nintendo Wii & the Blue Ocean Strategy

You are positioned 3rd on the market and clearly, the gamers are less interested in your future release than in the ones from Microsoft and Sony. These last 2 won the game and they are fighting each other without much care for Nintendo.

If you were Nintendo, should you try to beat them back with a more powerful console?

Of course not ! The GameCube failed because it tried to compete directly with the PS2 & the Xbox, so it was probably not a wise choice to use the same strategy.

A better strategy is to create a market where Nintendo will be the only player .

Red Ocean Vs. Blue Ocean Strategy

To talk about the blue ocean, we need to, first, talk about its opposite: the Red Ocean. This is the most known type of market, as you are competing directly with competitors to offer your products to people already looking for them and trying to find the best price for them. ==> Doesn't seem great no?

The Blue Ocean Strategy , theorized by W. Chan Kim and Renée Mauborgne, is the idea of creating a new demand for your products with a whole new audience based on a different pricing strategy or product differentiation.

Audience Definition

Let's go back now to Nintendo's case. We talked a lot about Gamers being the main audience for the gaming industry, you can define them by different factors:

• 17-35 years old
• Mostly males
• Interested in performance

Regarding Nintendo, in 2006, they decided to launch their new console, the Nintendo Wii , by focusing on a new audience who would soon be called the Casual Gamers . What's the difference? It's targeting everyone!

From kids to grandparents, everyone can play the Nintendo Wii with its easy-to-use gamepad that looks like a remote controller.

The fact is that the gaming industry, until then, was considered to be a niche , too complicated for people who were not fully into it like the Gamers (whom we started to call the Hardcore Gamers ).

From Wii Sports to Just Dance, the idea was to give anyone the ability to play easy-to-learn games that will have the full family playing together.

This was a completely new audience, far from the (way smaller) red ocean market overwhelmed by Microsoft & Sony.

In terms of results, here are the overall sales results from the consoles of this generation:

• Nintendo Wii (Nintendo): 101.63 million
• PlayStation 3 (Sony): 87.4 million
• Xbox 360 (Microsoft): 84 million

It was a pretty risk for Nintendo to switch from a well-known market to creating a new one. Be aware that risks exist by going to a new market. The fact is that it could have gone wrong if this new audience had not been receptive to this new console.

So balance the good and the bad if you are going out of a competitive market to create a new one. Furthermore, it is important to also understand that a new audience means new rules & new expectations. In the case of the Nintendo Wii, commercials were focused on family playing together while more standard gaming advertisement is focused on storytelling, epicness, and being the "hero" of the story .

Regarding the case of the Nintendo Wii, if the sales were outstanding regarding consoles, it was worth considering the sold videogames. Casual gamers are a bigger audience than hardcore gamers but these last ones invest more and are more loyal to Sony & Microsoft than casual gamers to Nintendo...

Hope you learned something interesting with this blue ocean strategy and see you soon for the next marketing case study!

And don't forget to read our other marketing case studies if you didn't do it yet!

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Strategic Analysis of Nintendo

This report is written with the purpose of giving recommendations to Nintendo in order for them to enhance their economic situation and re-establish themselves as the top player in the gaming industry.

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Journal of Business Strategy (Publisher: Emerald)

Svend Hollensen

The purpose with this article is to analyze the ‘Blue Ocean’ phenomenon in depth. The used methodology is a single case study regarding Nintendo and their different launches of games consoles (GameCube, Wii and Wii U) to the world market. The main finding is that even if a company can create a Blue Ocean very fast with the right value proposition at the right time, it may be short-termed and may be transformed into a Red Ocean again within 1-2 years, unless the company’s competitiveness is safe-guarded. There is constantly a need for reformulating the strategy through a dynamic and creative process, in order not to turn the Blue Ocean into a Red Ocean again. However this was what exactly happened to Nintendo with their game console ‘Wii’. Nintendo started out with a Red Ocean around 2005 with their GameCube. Then they turned it into a Blue Ocean with their introduction of ‘Wii’ in November 2006. But Nintendo could not prevent Sony and Microsoft in turning it back to a Red Ocean, with their introduction of similar product features (motion controls), but at better quality. If Nintendo will be able to reestablish the Blue Ocean with their introduction of the ‘Wii U’ in November 2012 is questionable.

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The Ultimate User Onboarding Guide (Strategy, Metrics & Case Studies)

11 min read

A great onboarding experience isn’t just a nice-to-have—in fact, 63% of people say that the quality of user onboarding can make or break their decision to choose a product. To help, we have put together this user onboarding guide with the strategy, best practices, metrics, and real-world examples.

• User onboarding is the process of guiding new users through the initial stages of using your product.
• Effective user onboarding shortens time to value , increases adoption and engagement, improves user satisfaction, and boosts retention .
• Creating a user onboarding strategy involves:
• Defining onboarding goals and milestones.
• Identifying user personas and their needs.
• Segmenting users into different groups.
• Creating personalized experiences for each segment.
• Measuring the results of your onboarding flows.
• User onboarding best practices include:
• Minimizing the number of steps in the user journey .
• Driving user engagement through gamification, checklists, interactive walkthroughs , resource centers , and tooltips .
• Making the most out of the ‘ empty state ‘.
• Launching surveys to understand friction points .
• Analyzing user behavior with analytics reports.
• Adding email marketing as part of your user onboarding process.
• Some key user onboarding metrics include checklist completion rate, user activation rate, time to value, core feature adoption rate, 1-month retention rate, and free trial-to-paid conversion rate.
• The Room , Groupize , and Sked Social are real-world examples of how you can improve onboarding metrics using the tips from this article.
• If you need help optimizing user onboarding and improving in-app experiences, book a demo with Userpilot now.

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What is user onboarding?

User onboarding is the process of guiding new users in understanding and using your product or service. It should make it easy for new users to navigate and use your product, increasing their likelihood of adopting it.

The onboarding experience sets the tone for the user’s relationship with your product—treat it as your chance to make a great first impression and get users excited about your product.

Why is user onboarding important?

A fantastic user onboarding experience can:

• Shorten time to value : Effective in-app onboarding helps users quickly understand how to use your product and solve their problems, reducing the time to see the value of the product in helping customers meet their goals and fix pain points.
• Increase product adoption and engagement : A well-designed onboarding process boosts product adoption by guiding users through key features, reducing friction and confusion, and personalizing the user experience.
• Improve user satisfaction : A smooth onboarding experience improves their overall satisfaction because it makes them feel supported and confident in navigating your product with ease.
• Boost stickiness and retention : Effective onboarding increases user stickiness by keeping users engaged and retaining them long-term, reducing churn rates.

How to create a user onboarding strategy in 5 steps

Here are five key steps to develop a successful customer onboarding strategy .

Step 1: Define onboarding goals

Firstly, identify onboarding goals for your business. Do you want to:

• Improve user activation in the early stages?
• Reduce time to value?
• Improve satisfaction by X%?

Step 2: Identify user personas and their needs

Defining user personas helps tailor the onboarding process to meet the specific needs and preferences of different user groups.

To start, outline specific characteristics for each persona , such as:

• Demographics : Age, location, education level.
• Job Roles : Titles, responsibilities, decision-making power.
• Goals : Objectives they want to achieve using your product.
• Challenges : Pain points or obstacles they face.
• Preferences : Preferred communication channels, feature priorities , etc.

Conduct a thorough user needs analysis to determine what problems users are trying to solve or what goals they want to achieve. This analysis will help you understand customer needs and pain points , allowing you to design an onboarding process that effectively addresses those needs.

Step 3: Segment users into different groups

By segmenting users based on their personas and goals, you can deliver a more personalized user onboarding experience that meets their needs.

Consider various types of user segmentation , such as demographic, geographic, behavioral, needs-based segmentation , etc.

To gather relevant data for segmentation, you can launch a welcome survey to collect information about new users and segment them based on their goals and pain points use cases:

• Content creators looking to create social media posts.
• Small business owners looking to create marketing materials.
• Teachers looking to create educational resources.

Step 4: Create personalized experiences for each segment

Imagine receiving tooltips and in-app guidance exactly when you need them as if the product can read your mind. This is the power of creating personalized experiences —users feel valued and understood, transforming their entire experience from overwhelming to exciting.

For example, you can create different onboarding flows for each pain point or goal a user mentioned in the welcome survey.

Let’s say a user mentioned experiencing difficulty managing deadlines. Based on this, you can create an onboarding flow with the following steps:

1. Introduce users to the task management feature.

2. Show them how to set deadlines and reminders.

3. Provide an interactive walkthrough on using the calendar view to track deadlines effectively.

4. Offer tips on prioritizing tasks and using notifications to stay on track.

Step 5: Measure the results of your onboarding flows

Measuring your onboarding flow performance helps you understand what works and what doesn’t so you can fix friction points and improve user experience.

Use product analytics to track metrics like user activation rates, time to value, feature adoption, etc., and identify trends.

Also, analyze survey data to gain deeper insights into user experiences that may not be clear from quantitative data.

For example, frequent drop-offs at specific steps show friction points needing attention. Continuously refining the process ensures it remains effective and responsive, leading to higher satisfaction and retention.

User onboarding process: Best practices

Here are some proven product onboarding best practices :

Minimize the number of steps in the user journey

Minimizing the number of steps in the customer journey reduces friction, speeds up time to value, and prevents decision paralysis. Here are some tips to streamline your user onboarding process:

• Only ask for essential information : Respect your users’ time by requesting only the necessary information during onboarding to increase the likelihood of successful completion.
• Reveal information and options gradually : Avoid overwhelming users with too many choices upfront. Instead, provide information progressively as users become more familiar with the product.
• Automatically fill in known information : Use data you already have to pre-fill forms and minimize manual entry, making the process quicker and easier for users.
• Offer integrations : Enable integrations that pull data from other systems to simplify setup and ensure users have everything they need in one place.
• Provide users with pre-built templates : Use pre-built customer onboarding templates to help users get started quickly and efficiently, reducing the need to set up everything from scratch.

Drive user engagement

Here’s how you can drive user engagement so users find continuous value in your product:

• Gamification : When onboarding users, incorporate gamification elements like points, badges, and progress bars to make the process more engaging and fun.
• User onboarding Checklists : Employ user onboarding checklists to guide users through essential steps in a clear and organized way.
• Interactive walkthroughs : Implement interactive walkthroughs to offer hands-on guidance as users navigate your product.
• Self-service resource centers : Create an in-app resource center where users can access tutorials, FAQs, and other helpful materials at their own pace.
• Tooltips : Use tooltips to provide contextual help in the app.

Use the ’empty state’ wisely

An empty state is the screen users see when they first interact with your product, and it plays a crucial role in directing them toward the next steps.

Empty states should show users what to do to use the product effectively. For instance, you can prompt users to complete their profiles, add their first task, or connect an integration. This reduces the time to value by helping users quickly see the benefits of your product.

Take a hint from Mixpanel that uses its empty state to encourage implementation:

Launch surveys to understand their friction points

Launching surveys during onboarding is a powerful way to gather user feedback and identify friction points that may hinder their experience.

Here are some examples of questions you can ask in a user onboarding survey :

• What did you find most challenging during the setup process?
• Were there any features or steps that were unclear or confusing?
• How satisfied are you with the guidance provided during onboarding?
• Is there any additional information or support you would have liked to receive?
• How likely are you to recommend our product to a colleague or friend based on your onboarding experience?

Analyze user behavior with analytics reports

Tracking in-app user behavior provides insights into how users interact with your product, helping you identify opportunities to improve the user experience .

Here are four key types of reports to consider:

• Trend report : A trend report tracks how users perform events and helps you identify patterns in user behavior.

• Funnel report : Funnel reports visualize how users complete key actions, highlighting where users drop off.

• Retention analysis : Retention analysis tracks how many users continue to use your product over a specific period.
• User paths : Analyzing user paths shows the sequences of actions users take within your product.

Add email marketing to your onboarding process

Using email marketing during onboarding allows you to meet users where they’re at and drive them back into your app.

Wes Bush identifies nine main types of user onboarding emails :

• Welcome emails : A welcome email sets the tone, introduces your product, and provides essential information to help users get started.
• Usage tips : These emails offer practical advice and highlight key features to help users get the most out of your product.
• Sales touch : These emails aim to convert trial users into paying customers by highlighting the benefits and value of your premium features.
• Usage reviews : Send periodic emails to keep users informed about their usage patterns .
• Case studies : Sharing success stories through case study onboarding emails can inspire users and show the real-world value of your product.
• Better life : Show users how your product can improve their lives or workflows, making it a crucial part of their routine.
• Post-trial survey : After a trial period, send a post-trial survey to gather user feedback and understand their experiences and pain points.
• Expiry warning/trial extension : Notify users when their trial is about to expire and offer extensions or special promotions to encourage users to convert.
• Customer welcome emails : Once users convert to paying customers, send a personalized welcome email to thank them and provide additional resources to ensure customer satisfaction .

User onboarding metrics to measure the effectiveness of your onboarding process

Here are key user onboarding metrics you should track, with insights from our product metrics benchmark report .

Onboarding checklist completion rate

The onboarding checklist completion rate measures the percentage of new users who complete all your checklist’s onboarding tasks.

To calculate the onboarding checklist completion rate, use the formula:

User onboarding checklist completion rate = (Number of users who complete the checklist / Total number of new users) * 100

Based on our report, the average onboarding checklist completion rate is 19.2%.

User activation rate

User activation rate measures the percentage of new users who complete a critical action that signifies they have experienced value from your product. This metric helps you understand how effectively your onboarding process converts new users into daily active users .

To calculate the user activation rate, use the formula:

User activation rate = (Number of activated users / Total number of new users) * 100

Our report showed that the average user activation rate is 37.5%.

Time to value

Time to value (TTV) is the time it takes a new user to experience value from your product.

To calculate time to value, track the time from a user’s initial sign-up to the moment they achieve a key milestone or action representing value.

Based on our data, the average time-to-value is one day, 12 hours, and 23 minutes.

The core feature adoption rate

The core feature adoption rate measures the percentage of users who adopt and use the key features of your product.

To calculate the core feature adoption rate , use the formula:

Core feature adoption rate = (Number of feature’s monthly active users / Number of user logins in a given period) * 100

We found that the average core feature adoption rate is 24.5%.

1-month retention rate

The 1-month retention rate measures the percentage of users who continue to use your product one month after signing up. This metric shows the effectiveness of your onboarding process and the overall value your product provides to new users.

To calculate the 1-month retention rate , use the formula:

1-month retention rate = (Number of users who remain after 1 month / Total number of new users) * 100

The average 1-month retention rate is 46.9%.

Free trial-to-paid conversion rate

The free trial-to-paid conversion rate measures the percentage of users who convert from a free trial to a paid subscription. This metric helps you understand whether users see enough value in your product to commit to a paid plan.

To calculate the free trial-to-paid conversion rate, use the formula:

The average free trial conversion rate for opt-in trials is 18.20% and for opt-out 48.80%. It also depends on your target audience—the conversion rate is higher for B2C than B2B.

User onboarding examples to learn from

Now, let’s get concrete. Here are three user onboarding case studies to get you inspired.

The Room increased new user activation by 75%

The Room significantly increased new user activation by creating an effective onboarding flow with Userpilot. They focused on encouraging users to upload their CVs by implementing a “driven action” UI pattern, which persistently encouraged users to complete this crucial step.

The onboarding flow triggered reminders and provided step-by-step instructions until users uploaded their CVs. This approach led to a 75% increase in CV uploads within just ten days, showing the impact of driven actions on user activation .​

Groupize gamified their user onboarding

Groupize enhanced its user onboarding experience by gamifying it using Userpilot as its user onboarding tool . They introduced G.G., an interactive assistant that guides users through the onboarding process with gamified elements.

G.G. offers support through onboarding tours , step-by-step checklists, and a resource center created with Userpilot. This approach improved user engagement and provided a fun and interactive way for users to learn about the platform, earning Groupize a nomination for the 2022 Skift Idea Awards​.

Sked Social tripled conversions with an onboarding checklist

Sked Social significantly improved their conversions by implementing an onboarding checklist with Userpilot.

The checklist included key tasks for users to gain value from the product, using psychological tricks like a progress bar and “endowed progress” to encourage completion.

The results? Sked Social tripled their conversions !

By now, you should have all the tips necessary to join the ranks of The Room, Groupize, and Sked Social, and boost your activation and conversion rates. And who knows—get nominated for a product award?

If there’s one thing you should take away from this article, it is this—don’t let your onboarding be an afterthought. Book a demo to learn how Userpilot can help you delight new users.

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Empowering student learning through ethical AI integration

Following the 2022 launch of ChatGPT, Amna Salik, Dean of Academics at The Millennium Universal College (TMUC) , was quick to see its potential. She, along with other TMUC academics, championed its use as a tool to transform education without sacrificing critical thinking and original composition.

Navigating challenges

Drawing a parallel between generative AI and other contemporary learning aids, Amna explains, “ChatGPT is like a new calculator when there were no calculators. We need to adapt and ensure our students make ethical use of these tools.” Inspired by this perspective, TMUC, in line with its forward-thinking ethos, integrated generative AI into their assessment workflow, viewing it as a natural digital progression for the institution.

However, the move sparked concerns among educators who worried that AI writing might disrupt traditional assessment methods, prompting critical questions: “How do we monitor academic integrity? How do we ensure students are actually thinking and putting in their original work?”

The linguistic diversity of the student body further complicated these concerns. While instruction is in English, many of TMUC's students are second-language English speakers. This made it a challenge to distinguish between genuine misunderstandings of what constitutes original writing and potential misconduct.

Clear and transparent policies are essential for reducing uncertainty for students and faculty alike, but the lack of uniformity in AI policies among TMUC’s partner universities made it tough for Amna to promote the fair and consistent use of generative AI among students across different institutions. Most international universities often had different tolerance levels, leading to a "wooly approach”.

Strategies for success

Determined to empower students in independent thinking and original writing while staying true to their innovative vision, TMUC faculty embarked on implementing robust processes that support and regulate the use of generative AI, with faculty reviewing practice during each assessment cycle.

TMUC prioritized creating solutions that were sensitive to linguistic challenges across the student body, ensuring fair assessment and support for all students, regardless of their backgrounds or English-language proficiency.

Rather than adopting a zero-tolerance stance to AI writing, TMUC chose to adapt their teaching and assessment methods as a means to support authentic learning. They integrated Turnitin’s AI writing indicator as a tool for contextualized assessment, which Amna explains as being “about faculty and staff knowing the learner, understanding the skill set, and their capacity to be able to express their ideas.”

By assessing the severity of each potential AI writing ‘case’, educators can determine whether a likely AI writing instance is a result of a student’s language competence or their use of shortcuts. This approach is especially crucial for a student body with mixed abilities and proficiencies, many of whom are second-language English speakers.

The AI writing report has become fundamental to TMUC’s modernized, formative assessment approach. Faculty members provide personalized feedback using the AI writing report to highlight flagged areas and offer tailored guidance. This approach fosters a continuous cycle of improvement while safeguarding academic and integrity standards at TMUC.

Amna emphasizes, “It's about training them, upskilling them, providing them with support so that they feel confident with their academic writing and they don't have to revert to using shortcuts.”

Achieving impact

Turnitin’s AI writing indicator and report quickly demonstrated its value at TMUC. Amna notes that AI writing reports not only help educators identify potentially AI-generated text, “but also supports in how to have those really purposeful conversations with students on what to look at, what to rethink, what to redraft.”

With detailed insights into where and how their students may be using generative AI, Turnitin’s AI writing report, alongside resources like Turnitin’s interactive, multi-resource AI writing puzzle, has empowered educators at TMUC to offer better guidance and support. These tools help design tasks that cultivate students’ original thinking skills and aid in the effective use of generative AI—enhancing the overall learning experience.

"[ The AI writing puzzle ] includes video links and guidance notes. It has rubrics on how to assess and measure your assessment task. So if you've designed an assessment task, it actually gives you a benchmark to say, ‘Okay, how do I check that? What skill set am I hitting? Am I enabling proficient thinking and the use of AI tools or am I at a risk?’"

TMUC now boasts a growing number of advocates, or "champions," across various programs who actively support the use of generative AI in tandem with Turnitin’s AI writing detection capabilities. By empowering educators to drive change, these champions have been key in accelerating the adoption of generative AI as a form of learning and fostering a culture of support and collaboration within the institution.

“Long term is that [generative AI] is here to stay,” notes Amna, “we need to make sure that we create awareness among both our students and our faculty, and give them the skill and the aptitude to be able to embrace this.”

Initial hesitation among faculty has significantly diminished, with many now recognizing that generative AI tools can complement and strengthen their teaching.

Implementation of Turnitin’s AI writing detection feature at TMUC has led to a noticeable reduction in the submission of unoriginal AI-generated work, Amna explains. Students have realized that staff can quickly identify AI-generated text via the AI writing detection feature, thus the allure of shortcuts has decreased. TMUC has made significant strides in encouraging students to use generative AI as supportive learning resources that stimulate independent thinking.

To bridge educational practices and policies set by the partner universities, and establish a unified approach to AI writing, TMUC has developed guidelines ensuring clarity and fairness for all students, regardless of their chosen programme of study.

At TMUC, the journey towards integrating generative AI began with TMUC’s CEO and Founder, Dr. Faisal Mushtaq, belief and recognition that, "technology will not replace teachers, but it will certainly replace teachers who do not keep up with developments in technology." This insight drove TMUC to embrace generative AI as a tool to empower students while upholding academic integrity.

With clear insights and guidelines bolstered by Turnitin's AI writing detection capabilities, TMUC now ensures that every student is equipped to thrive.

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How an insolvent travel industry giant got back on track

EY teams steered international conglomerate HNA Group successfully through one of China’s largest corporate restructurings.

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• 2. Better answer
• 3. Better working world
• How EY can help

The better the question

How can a grounded business fly high again?

The HNA Group was already struggling when COVID-19 compounded its debt crisis.

I t had seemed like an expansionist success story. Starting out as a one-aircraft operator in China’s southernmost province of Hainan in 1990, HNA became the country’s fourth largest airline after a decade of highly leveraged acquisitions.

The group then expanded just as ambitiously – and incurred comparable levels of debt – in the hotel, tourism, finance and technology sectors. It grew abroad as well as within China, with a string of significantly leveraged acquisitions. These included a large US-listed aircraft, US electronics distributor Ingram Micro, a 25% financial share in the Hilton Group, and the largest financial stake in Deutsche Bank. By 2017, it owned almost 3,000 companies, with assets topping RMB1 trillion.

But by early 2020 the financial pressure of billions of dollars of debt left HNA Group starved of cash. COVID-19 and the global travel freeze was the final blow. With the group unable to pay creditors, or many of its 100,000 employees, Hainan’s provincial government established a joint working group to assess the conglomerate’s assets and liabilities, simplify its shareholdings and restructure the business. The working group, made up of representatives from the provincial government, the civil aviation authority and China Development Bank, concluded that bankruptcy was the best way to save the group.

Over the next two years, a multi-party team – including members from the provincial government, creditors, HNA Group and EY China – worked tirelessly to breathe new life into the group. It was a significant challenge.

Yongmin Yuan, EY China Head of Turnaround and Restructuring Strategy, says: “HNA Group was a giant conglomerate with sprawling subsidiaries in a complex shareholding structure, engaged in extensive businesses with diversified assets located worldwide.”

The better the answer

Landmark decisions set a clear course for future success

The courts and creditors backed a restructuring plan that focused on the group’s core business.

The bankruptcy restructuring programme was the world’s third biggest ever. It involved four simultaneous cases: three for the listed airlines, airports and commercial entities, and the other covering 321 HNA Group Chinese subsidiaries.

The administrators – which included EY China – made a number of landmark decisions during the restructuring process. To start, they chose the collective insolvency procedure bankruptcy route for the 321 Chinese subsidiaries, which judged them as one entity. This avoided the complexity and cost of separating out the interconnected businesses.

The inclusion of EY in the administrators’ team reflected the value and breadth of its support for the HNA Group during the immediate pre-restructuring period. Generally, major, large-scale Chinese restructurings do not make accountancy businesses administrators, relying more on legal firms.

The debt restructuring plans got the legal go-ahead in China and Europe, along with approval from 90% of creditors. This was the first time the EU had recognized a bankruptcy reorganization sanctioned by a Mainland China court. The conglomerate was then divided into four independently listed entities – aviation, airport, commercial and financial – designed to deliver optimum synergies between the group’s different businesses.

Streamlining for sustainable growth

HNA Group’s vast portfolio of companies was streamlined to focus on its core air industry businesses. This included selling Ingram Micro to global M&A firm Platinum Equity for US$5.9 billion, enabling M&A loans and debts to be repaid and expenses reduced.

To get the business in the best shape for sustainable growth, it was tailored to fit the evolving market. HNA Group’s airport operations, for example, were honed to concentrate on airports, duty-free business and airport-related infrastructure construction. This decision mirrored new opportunities arising in Hainan, one of China’s largest free-trade ports.

The province is opening its airports to more international flights and introducing lower, simpler tariffs and taxes, including an increase in the duty-free allowance. Reflecting a wider real estate slump, the airport entity wound down its sale of undeveloped land around its two Hainan airports.

EY China took measures to settle the debt crisis, improve the efficiency of asset utilization, and safeguard the effective operations of the HNA Group.

Partner, Turnaround and Restructuring Strategy, Ernst & Young (China) Advisory Limited

In December 2021, the aviation entity was transferred to strategic investor Liaoning Fangda Group Industrial and the airport entity to its strategic investor, state-owned Hainan Development Holding Co., Ltd. Both strategic investors took full control of their respective entities, with creditors holding minority shares. Strategic investors are being sought for the commercial and financial entities. The group of 321 Chinese subsidiaries, which is owned by creditors, has been renamed Hainan HNA No.1 and No.2 Information Management Service Co., Ltd., and now owns the HNA Group’s former overseas assets.

In April 2022, just six months after creditors sanctioned the restructuring, the ambitious international programme was complete. The HNA Group had been slimmed down from an ailing international conglomerate with more than 2,000 companies to a streamlined entity focusing on hotels, finance (including insurance), commercial activity (primarily department stores) and logistics.

Delivering to a nine-month deadline

EY China was an integral part of the multi-party group that moved HNA Group businesses from crisis to recovery. The complexity of the restructuring is reflected in its broad remit. The 400-strong EY team – which included professionals from the Turnaround and Restructuring Strategy, Assurance, Tax, Forensic & Integrity Services practices – undertook such activity as:

• Working with creditors to establish whether the HNA Group was a going concern, when the debt crisis first became apparent
• Advising on the restructuring of assets, liabilities and shareholdings and the disposal of assets
• Providing working capital advisory services to help HNA Group adapt its business and operational policies to release cash
• Implementing business and management restructuring, paving the way for better operations and profitability
• Monitoring group spending and operations, as creditors exercised their legal right to manage HNA Group assets
• Acting as a communications bridge between numerous stakeholders, and so helping to achieve the strong mandate for the restructuring plans
• Recruiting fitting strategic investors, with a targeted communication campaign and due diligence programmes

To complete the extremely complex restructuring within nine months, as required in China, the EY team often worked long hours, seven days a week to get the job done. York Zheng, Partner, Turnaround and Restructuring Strategy, Ernst & Young (China) Advisory Limited, says: “The administrators encountered multiple challenges, in tax, law, operation, cash monitoring and so on. EY China took measures to settle the debt crisis, improve the efficiency of asset utilization, and safeguard the effective operations of the HNA Group.”

Zheng identified four major challenges:

• The complexity of restructuring three listed businesses and the 321 other China-based HNA Group businesses within just nine months.
• Communicating with and getting buy-in from the HNA Group’s 60,000 creditors who – reflecting its assets – were spread around the world.
• The risk that arrears in payments to flight crews and suppliers could impair the safety and airworthiness of group flights. The chance of negligence or industrial action by staff was allayed by engaging them in regular briefings on the goals and progress of the restructuring
• The need to untangle the tens of thousands of transactions between the HNA Group’s 2,000 companies.

The better the world works

Swift completion of restructuring created certainty and stability

Effective navigation through crisis protected the value of HNA Group businesses and benefits stakeholders.

The restructuring of the HNA Group delivered significant benefits for the business and wider society, both in China and internationally.

The swift identification of assets and liabilities and the rapid legal approval of the restructuring plans meant strategic investors quickly had the information they needed to inject funds into the business. This resulted in creditor debts being serviced swiftly. Likewise, the completion of the restructuring program just six months after it received legal and creditor approval gave all HNA Group’s stakeholders stability and certainty.

EY’s integrated team and its seamless services are enabling the whole restructuring process to be done very efficiently and are creating huge value.

HNA management team

Significantly, none of HNA Group’s 100,000 employees lost their jobs due to the pandemic and the success of the Group’s restructuring has meant that more than 2,000 companies in over 10 countries have avoided needing to close down. Those whose salary was in arrears during the debt crisis received their back pay and, with prospects bright for the HNA Group’s businesses and the wider region, employees are facing a positive future.

Maggie Cui, Partner, Turnaround and Restructuring Strategy, Ernst & Young (China) Advisory Limited, says: "We were intensely aware that the reorganization of the HNA Group was not just an engagement; it was vital for regional economic stability and social security. In restructuring and turning around the group, we made every endeavour to preserve its value and navigate it through the crisis.”

HNA management says: “The HNA restructuring is an enormously complicated project. EY’s integrated team and its seamless services are enabling the whole restructuring process to be done very efficiently and are creating huge value.”

The work of EY teams has also been commended by HNA creditors. China Development Bank, which chairs the debt committee, says: “EY has provided strong and professional audit, advisory and debt restructuring services. This has contributed important value to the smooth restructuring of HNA and to the realization of a multi-win situation.”

The Export-Import Bank of China, one of the leading HNA Group creditors, adds: “As one of the HNA restructuring administrators, EY has demonstrated very solid financial expertise and has always provided timely feedback and valuable advice. We appreciate their hard work and dedication.”

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