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Nintendo Case Study Analysis In Education

Lessons Learned from Noncustomers

Author(s): KIM, W. Chan, MAUBORGNE, Renée, HUNTER, Jason

Summary:

This case illustrates that if companies wish to tap into latent demand and create organic growth they must learn from noncustomers. The case demonstrates that if Nintendo attempted to compete head-to-head against the Sony PlayStation and Microsoft X-box they would likely have been further marginalized in the game console industry.

Instead, Nintendo looked to the gaming industry´s noncustomers for insight: older non-gamers, parents who wanted their children to play active games, the elderly, and very young children. Once Nintendo understood why these noncustomer groups shunned video games, they reconstructed elements across market boundaries to create a console based on simplicity, functionality, and interactivity, with games that dramatically raised utility for these noncustomers.

The Nintendo Wii case analysis illustrates that a better solution to an existing problem is not good enough. To capture new demand companies need to focus on the demand side of the equation and redefine the problem itself. There are far more noncustomers than customers. Companies need to look systematically across established boundaries of competition and reconstruct buyer value elements across market, industry, buyer, and supplier boundaries to create new market space where a new level of demand is generated.

Pedagogical Objectives:

  • To clearly show the power of reorienting one’s strategic focus from current competition to alternatives and from customers to noncustomers. From this strategic perspective, one gains insight into how to redefine the problem the industry focuses on and reconstruct buyer value elements that reside across industry boundaries
  • To illustrate that by looking to noncustomers and focusing on their key commonalities – not differences – one can aggregate new demand and offer the mass of customers and noncustomers a leap in value
  • To understand that companies must concentrate not only on customers but also on noncustomers, equally vital for future growth. This allows companies to reach beyond existing demand to unlock a new mass of customers that did not exist before
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Can the Wii U come back from a poor 1 st  year performance?  Why would you buy the Nintendo Wii or the Wii U? In the current market today, Nintendo’s current flagship Nintendo Wii is in a tight competition with Microsoft’s Xbox 360, and soon to come Xbox One and Sony’s PlayStation 3, and soon to come, its eighth generation console, the PlayStation 4. Since the release of the Wii in late 2006, it has been the top selling console in the video-gaming market having sold 100.3 million consoles since its release, topping both the Xbox  360 and  the  PlayStation  3 at 78.84 million  and  80.29 million  consoles sold respectively since their release dates. i Background Information Nintendo started off operations earlier on in the 20 th  century and released their first console, the Nintendo Entertainment System (NES) in 1985. It was an instant hit and over the course of its lifetime, managed to sell over 60 million units and introduced its flagship games, Super Mario and Legend of Zelda. Nintendo later released the Game Boy, which bundled with the famous game Tetris. ii  The Nintendo 64 set new standards in the gaming world in 1996 and at its release; its graphics and gameplay were like no other until the release of Sony’s PlayStation, Sega’s Dreamcast and other consoles that stored games on CD’s instead of on the more expensive cartridges that Nintendo was using. The Nintendo 64 managed to sell up to 32 million consoles as of 2009. At the time of its release, Nintendo felt like cartridges were a more favorable format of media for the time and that CDs would be plagued with extreme load times.  iii 2

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