Situation Analysis and Marketing Plan for X-Box


This analysis involves conducting surveys and studies on the situation analysis and future marketing plan of Kinect Xbox 360. It is necessary to determine the consumer decision-making process and the potential of the product influence on the consumers. The product is in a position to face competition and challenges as a new product in the market. Since U.S. is a developed country with diverse cultures, the marketer needs to understand the forces in the market in order to maximize profits and dominate the market (Warren, 2011). The report shows the past, present, and future performance of the product as a new entrant in the U.S. market. The marketing plan constitutes the challenges the product has in the market, situation analysis, SWOT analysis, macro economic factors affecting the company, required market segmentation, marketing strategies and the short and long-term projections needed for progress of the company. The marketing plan will be based on the need for a better future performance and survival of the product in the market (Pride, 2010). This report request was made by the chief executive officer of Microsoft Corp (MCFT) and is to be due on June 22, 2011.

Product Description

Xbox is one of the two largest gaming devices used in the world. Microsoft has always been on the frontier of computer innovation since its foundation and has innovated Xbox as one of its best products. Xbox Kinect is the first step in the next big product in gaming. Xbox has come up with a new technology that detects movements of the body and applies them as instructions when playing a game. That is why the Kinect Xbox has the motto, “You are the controller. No gadgets, no gizmos, just you!” It works by setting up a centerpiece that has a camera that perceives the body movements and the voice. This movements and use of the voice act as the controllers of the game. Xbox Kinect has started a mini-revolution in gaming due to aerobic portion that people have started to play video games for exercise (Xbox, 2011).

This product offers unique qualities since the controls are the body movements. Games offered by Xbox kinect range from normal sports video games to shooter games all the way to exercise or workout routines. The sleek design of the product gives the consumer a product that does not look out of place in front of the TV. The technology innovation was by outside companies Rare and PrimeSense who combined efforts to come up with a system that uses infrared translators of 3D body motion as controls of a game. This product obviously has a brand name associated with it, which is why its success was almost instantaneous. Xbox and Microsoft’s loyal customers trusted that the product would be just as great as their other products (Warren, 2011).

The only downfall to the Xbox Kinect is that it is expensive. The Xbox Kinect cost $150 in December 2010 and still cost around $120. The prices depends on the dealer, promotions available and bundle packages available. Even though the Kinect is like getting a completely new gaming system (other than the Xbox it works with), most people felt that the price of the Kinect was too high since the price of the Xbox itself is only $200 (Bing, 2011).

When the Kinect first came out, it was hard to get your hands on one even though it was sold everywhere. This means that the demand was higher than the supply. The products sold include the gaming devices, video games and tech devices. The Kinect sells through online stores such as Amazon and eBay and the online stores of places like Target, Best Buy, GameStop and others. This device has been established in North America, Europe, China, Japan and anywhere else around the world (Warren, 2011).

Even before Microsoft and Xbox released the product in the market, information about the Kinect was spread through rumors of a real-action controlled video gaming experience. This made it easier to promote Xbox anywhere and everywhere in the market. The promotion used different TV commercials to run the Kinect making it the first video game system meant for everyone since it required no understanding of a controller, “you just have to do what you already know how to do” (Xbox, 2011).

Target Customer/Market

Market size is the number of buyers and sellers in a particular market. It measures the total value and volume of sales made to the target customers. It helps emerging enterprises and existing companies to identify the number of their potential customers in their new product or service (Pride, 2010). According to research done on June 2011, Kinetic Xbox 360 has the largest market size among other consumer software products. It recorded a total annual sale of 5 million of motion sensing Kinect from 3 million sales last year. This shows an increase in the annual sales. The company also produces kinetic systems whose sales increase from 2.5 million to 4.1 million sales within a period of 25 days of the marketing campaign (Warren, 2011). This shows that the company has a greater chance of attracting and maintaining more customers to its new product. The company sold 297,000 units of Xbox 360 in April making it the most preferred and demanded software product in U.S. The products market size increases by 60% each year (Oiaga, 2010).

Market segmentation

Market segmentation is a collection of prospective buyers into groups or segments with common needs and responses to a particular product or service. Given that a consumer is a unique being and tends to control all that goes on his or her mind and life in reference to a given product, the marketer has to understand the consumer and his way of thinking when identifying his target customers (West, 2010). Market segmentation enables focus on subsets of potential customers. Proper market segmentation enables the business to achieve maximum returns from sales and marketing expenditure regardless of the nature of customers and competitors (West, 2010).

Behavioral segmentation

This segmentation divides the market groups according to the knowledge, attitudes, uses, and responses of customers to the product. For example, the customer makes purchases based on the benefits they get from the product, level of usage of the product, level of loyalty, user status, and level of their readiness to purchase (West, 2010).

Use of waves of body parts and the voice

The customer benefits from doing exercises on all the body parts and at the same time relaxing his or her mind during the entertainment. This interests the consumers to increase their purchase and usage of the product (Warren, 2011).

Ability to play games on the screen

Games are the most preferred form of entertainment. The product enables the user to play the games he or she likes since the product provides a variety of them. This helps to maintain and attract new customers due to the influence of the benefits of personal experience (Warren, 201).

Extending the product operations in the mobile phones

Most people carry their mobile phones everywhere hence introducing the product in the mobile phones means that customers can use it anywhere they need it (Warren, 2011).

Partnership with Face book

This product helps its customers to socialize with their partners and friends. It encourages customers to use the product to satisfy their needs and wants for instant communication and competition (Foti, 2010).

Psychographic segmentation

This segmentation divides the market groups according to the social status, personality, motivation, and lifestyle of customers to the product (Taylor, 2011).

Use of the TV and computer systems

TVs’ are at homes as a form of entertainment and source of information. Adding games to the TV enhances the ability of its awareness to large masses of people. TV games and computer systems are also associated with high standards of living encouraging all the people in the social class to adapt the product (Vega, 2011).

Demographic segmentation

This segmentation divides the market groups according to gender, age, family size and family lifecycle among others. Although the marketer has not emphasized much on this segmentation, the company has been able to derive advantages of this segmentation to identify the target customers (Taylor, 2011).

Family entertainment

This software product is mostly associated with young children and especially the boys. Although they are the main influencers, this product has proven to be for all the members of the family despite their age and gender. It forms a base for entertainment for the whole family and a way to build strong bonds between the family members (Foti, 2010).


Positioning is a method of creating a picture of a particular product in the minds of consumers. The idea of positioning relates to the way consumers perceive and evaluate products and services. Consumers rank the features and attributes of the product against those of the competitors. The researcher looks at the position of the product against competing products and a benefit that is unique to the target customer needs and wants (West, 2010).

Unique and advanced entertainment, exercise and socialization have helped the product to be unique from that of the competitors. The product makes use of the wave of the parts of the body and voice to play games. The knowledge of the use of devices is not required making it possible to be used by all people regardless of their level of education, age, gender, personality, and social status. The entertainment perceives to be very interesting and beneficial to the family, friends, and individuals especially during leisure time (Warren, 2011).

Situational analysis

These factors help the marketer in analyzing and evaluating the marketing strategies and plans. The bargaining power of customers is high since the demand is higher than the supply and the customers purchase the product despite the high prices. The suppliers make orders from the producer to meet the high demand of the product. The main suppliers are Amazon, Best Buy, Target, eBay and GameStop (Luther, 2011).

The other software producers have technologically advanced devices for controlling games and some consumers prefer using devices uses them. The price of the product is high hence, the customers prefer purchasing other similar products. The competitors are aware of the competition hence have to evaluate their strategies to compete effectively with the product, possessing danger for the product market dominance (Foti, 2010). The diagram below illustrates the Michael Porter five-force model (Porter, 2011).

The Michael Porter five-force model (Porter, 2011)

Pest Analysis/macro environment factors

Political factors

The laws of U.S. do not forbid kinetic Xbox 360 but the supreme courts continue bringing the agenda for discussion to eliminate offensive and negative influential images. The law however imposes heavy penalties on release of implicit images to children under 18 years old. This makes the product expensive. Nevertheless, there are organizations for example. The ESRB negotiates with the software producers to regulate their release of images that have negative impacts on the society (Foti, 2010).

Economic factors

Lack of employment in U.S. has led to many people spending most of their time on entertainment. This product enhances addiction and idling. This consequently increases poverty level among many people generating less revenue to the government. The government has to impose high taxes on products in order to get enough revenue to cater for its expenditure (Mansson, 2011).

Social-cultural factors

Parents are concerned much of their children’s behavior. They always try to control and protect their children from harmful influence. The children of below age 18 are easily influenced to bad conduct hence should be protected from negative influence (Batiromo, 2011).

Technological factors

There is a lot of competition in the software industry to give the most competitive services and solutions to its customers. This product has managed to be the world’s leader of games technology providing satisfaction to its customers. The software is able to detect the movement of parts of the body and voice making the game more interesting (Warren, 2011).

SWOT analysis

The matrix below illustrates the SWOT analysis of Xbox Kinetic in the U.S. market (West, 2010).

The SWOT analysis of Xbox Kinetic in the U.S. market (West, 2010)


The product easily creates addiction and interesting entertainment making it attractive to the customers. The product attracts customers from other products due to its unique features such as use of the hand wave and voice to control games on the screen. All the family members use the product making it acceptable and most used software product in the U.S. market. The product is in the most used facilities such as the TV, mobile phones, and the face book (Warren, 2011).


The price of the product is very high making it difficult for customers to purchase it frequently as much as they need (Bing, 2011).


The product has a chance of penetrating in the market in the future and making very high products if it is introduced in the mobile phones and its price are regulated the meet the customer abilities to purchase it more frequently and at ease. The customers download games in the digital distribution enhancing accessibility of the product. This consequently increases the market share (Foti, 2010).


The competitors’ prices are low hence; most of the customers substitute the product with that of the competitors. The competitors are in a position to emulate the technology causing threat to the only unique feature of the product. This causes danger of losing the market share in the future. The company is facing competition from Sony Corps play station and Nintendo’s Wii system since their prices are lower and their products are of quality. The only difference is they use controlling devices limiting their product to age and gender. These products act as substitutes to consumers of Xbox Kinetic (Foti, 2010; Mansson, 2011).

Marketing Plan

Situational analysis

Company analysis

Marketers are keen to utilize resources to attain the maximum possible favorable impact within the specified periods. The key concern is the execution of the contents of the plan in a manner that registers the cooperate impact the product wants to attain (Ferrel, 2008). The product has already penetrated in the market. The marketer wants to maintain high prices to maximize the profits. The company therefore, uses standardized strategic approach to compete effectively in the market. Although this strategy is for short term, adjustments are required to adapt the diverse nature of the target market. Adjustments need the understanding of the consumer buying process (Warren, 2011).

Customer analysis

This analysis enables the establishment of a market that survives in the competitive market. The TV commercials advertise the product constantly to remind and inform the customers about the product. Face book enhances social networking of friends and partners. The product targets family and friends of all gender and age and eliminates the use of education by replacing controlling devices with wave of body parts and use of the voice to control the game. Consumers have different tastes and preferences hence understanding their needs and want more than they do created market for the product. The marketer wants to examine the effectiveness of these strategies in attracting and maintaining more customers (Reuters, 2011).

Competitor analysis

The company produces unique and quality products that differentiate the company products and services from its competitors. Its efforts to understand consumer needs and wants of change in the routine of playing games has generated a bigger market share and advanced the profits of the company (Taylor, 2011).


Parents have the chance of protecting their children from influence of the product through interacting during playing the game for example, crime, drugs, and sexually implicit images influence children under 18 years since they experiment that which they see. This also reduces the chances of penalties for under age negative influence by the Supreme Court when reported by the parents since parents have the responsibility of controlling their children since they understand the games as well. The parents’ preference for this product for their children will increase the market share of the product. This makes them apart of the company (Taylor, 2011). The retailers and promotional partners for example, the studios, distribute the products (Xbox, 2011).

Macro environment factors

These factors are beyond the company’s control hence must be considered in the decision making process since it affects the overall performance and strategies of the company (Taylor, 2011).

Political factors

Include the pressure groups, government agencies, and the legislation limiting the activities of the company. For instance, the Supreme Court charges high penalties to the company for releasing illegal images, that is, crime and sexually implicit images to children less than 18 years. The company introduces a product that includes the parents’ participation to ensure that they have control over their children influence. Pressure groups, for example, the ESRB control the software producers from release of images that have negative impacts on the society. The company should consider the rules and regulation set by these organizations to avoid extra expenditure on penalties (Foti, 2010; Taylor, 2011).

Social factors

These forces affect the behavior, attitude, and preference of consumers. The company has introduced a unique product that interests many consumers. The product also includes the parents in the use of the product increasing socialization in the society. The company should consider enhancing these factors to attract and maintain more customers (Taylor, 2011).

Economic factors

These involve factors that affect the purchasing power of customers. The price of the product is high hence reducing the willingness of the consumer to spend on the product. The company should consider lowering the prices to increase the market size to maximize its profits (Mansson, 2011; Taylor, 2011).

Natural resources

They include the raw materials and the energy sources. The company has introduced batteries and 2GB broadband to enable efficient use of the product. The company should introduce more improved and durable facilities to cater for long period needs of the consumers (Xbox, 2011; Taylor, 2011).

Technological factors

These forces affect introduction of new products and creation of markets and opportunities for the product. The company produces the best technology compared to the other software companies. It is the high time the company hires qualified employees to enhance technology to compete effectively in the future with its competitors and to maintain its position in the technology sector (Warren, 2011; Kotaku, 2011).

Demographic factors

These factors involve the size of population, location, race, and occupation. There is a lot of racism in U.S. hence; the company should put efforts to reduce it in order to enhance its product penetration in the market. The company should promote their products severely in dense populated areas to enlarge its market size quickly with less expense (Taylor, 2011).

SWOT analysis


Despite the high prices, the product remains the most demanded in U.S. compared to the other software products. The has a chance of making very high profits now and in the future due to its high acceptability and adaptation by the consumers (Waren, 2011; Bing, 2011).


The high prices discourage customers from purchasing the product since games are associated with gabbling (Mansson, 2011).


The product has unique characteristics that create addiction of the product enabling the company to make more profits. The product use is by anyone despite the age and gender creating greater chances for high usage of the product thus yielding more profits (Warren, 2011).


The high prices make the consumers shift from the product to that of the competitors leading to a decrease in its market share (Mansson, 2011).

Market segmentation

Geographical segmentation

The company should extend their market to the rural areas in order to increase their market share. The company should extend its geographical coverage to reach more customers. This enables the product to dominate the market in a way that guarantees its survival even in very competitive market conditions (West, 2010).

Alternative marketing strategy

Guerilla marketing

This marketing strategy is very appropriate for the Microsoft company games are very attractive and interesting to consumers. It enables create awareness of their product by ensuring the consumer always remember the encounter. The promotion of the product involves presenting the product in the public in a way not expected by the consumers. This strategy attracts a large number of customers maximizing the company’s profits (West, 2010).

Selected marketing strategy

Marketing Mix Elements

Marketing mix designs to respond to the cultural diversity and complexity resulting from the marketing environment. Due to the challenges experienced and threats of perception as a new and less competitive producer, the marketer requires creating a program that registers the maximum possible impact in its target markets (Pride, 2010).


The product uses penetration-pricing strategy where the price is set high due to the perceived high quality of the product. Price adjustments are necessary to ensure the product is affordable and to prevent losing customers to the competitors. Variable cost is more preferred for the future market survival of the product. Purchase of the product is before its use (Mansson, 2011).


Kinetic Xbox 360 is a unique brand name that differentiates the product from that of competitors. The customers’ attraction is the use of body parts movement and voice to control games. This quality makes the product the best and preferred software product in U.S. the product is able to satisfy the needs, preferences, and requirements of the customers. The company should focus on maintaining and improving the product.


The company should make their decisions based on the structures of distribution channels, patterns of the distribution design, choices of the intermediaries, and consider the factors affecting the choices and management of the channels of distribution (Foti, 2010).


Campaigns, vivid advertisement, publicity and personal selling are useful to increase awareness of the product to establish sustainable market share in the future. The marketer should take into consideration the diversity of target market and focus on improving communication effectiveness about the brand and the company in the target market (Reuters, 2011).

The marketer should account for the diversity of customer needs, literacy levels, communication styles, and language barrier. Promotion programs should be consistent and controlled by defining the marketing and communication objectives to achieve an integrated marketing program. Frequent promotional messages inform, educate, and remind customers of the product and services (West, 2010).

Short and long-term projections

The budget focuses on the costs of distribution, transportation, operation, promotion, and maintenance of the product. The performance of the product reflects in the market size: total sales and the total volume of sales. The marketer requires a specification of the types of controls that the product relies on to ensure that the performance enhances and the expected impact on the target market achieved. The performance of the competitors is necessary to monitor the progress and survival of the product in the target market (Pride, 2010).

Implementation programs specifies the objectives to achieve, standards of compliance, assignment of responsibility, measurement of performance, corrective actions, and the appropriate work structure for coordinating marketing activities in the target market. The marketers focus on the key aspects of the exchange process helps to bring out the desired objectives and implementation programs. This helps to enhance the knowledge and understanding of marketing skills needed for the product and services, to create awareness of the opportunities in the market, and to ensure business improvement and development (West, 2010).


The product uses a uniform focus for all its customers to attain a common market perception and image irrespective of its competitors. Customers have responded to the product by increasing their demand. However, the customers want the price of the product to reduce for them to purchase it more often. This shows their willingness to use the product. Understanding the marketing internal and external environment helps the company to take action and caution on improving the performance and profits of the business. It is important for the firm to understand and analyze the results of the market and organization conditions to enable monitoring and implementation of programs that enable the product to compete effectively in the market. Analyzing the market helps to create new market opportunities and allocate resources according to the potential market. The company has to take its responsibility of ensuring their product promotes ethics in the society and not to terminate it.


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