Case Analysis - Microsoft Zune/Bell Canada/Chrysler
...in order to establish a significant market position. The portable media player industry is one which is dominated by iPod's monopoly, and saturated with second rate competitors; such as th ironically names iRiver, and Toshiba's Gigabeat. All have been struggling to attain any market share under Apple's prevailing shadow.
Microsoft's major problem in this market is the dominance of the apple brand which has become synonymous with portable music entertainment. The company will need to capture a considerable market share in order for consumers to recognize the media player as purchase worthy. Already having been adopted by innovators in the market, it is now up to Microsoft to push the product onto early adopters with hopes that the product is accepted by all consumer segments. Furthermore, the company needs to enlarge the market potential which at the moment, is restricted by 2 major factors:
1 Awareness: With iPod's first mover advantage, reinforced by its effective marketing efforts, Apple has captured a large majority of market potential. While the Zune is a new product in the introductory stages of the product life cycle, consumers are lacking product and brand awareness and do not fully comprehend the benefits of the product.
2- Ability to Use: Since the iPod interface has been adopted by most, Zune's target market lacks the ability to use, and therefore comprehend the product benefits. Microsoft must therefore increase the ability for consumer trials before purchase, in order to promote its interface which has gotten positive reviews.
It is obvious that Microsoft, like all other prospective iPod contestants, has taken a competitor oriented approach. The company is using benchmarking in all aspects of operations, from product design, to pricing and distribution. Using a competitor reactive market based pricing system; the retail value of the Zune is...
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