A marketing auditing is a compendious, structured analysis of an organizations environment which consists of both internal and external factors into consideration. It comprises of appropriate targets and potentials to follow along with measurements to be taken accordingly (Blythe, 2009).

QUESTION

Marketing Auditing/ Situational analysis

 A marketing auditing is a compendious, structured analysis of an organizations environment which consists of both internal and external factors into consideration. It comprises of appropriate targets and potentials to follow along with measurements to be taken accordingly (Blythe, 2009).

PESTLE Analysis

 Political

Different political factors such as the US-China trade war in recent times have affected the sale of the product in those regions. Microsoft may have the upper hand in policies concerning gaming consoles, sometimes bending in favor of the political parties or candidates. A recent example was when Xbox played a political advertisement on the consoles for a few days in limited regions, supporting a particular candidate (MBA Skool, 2019). The advertisement received negative feedback from the users and the company decided to remove the advertisement. In the political world, the gaming industry does not face much rage. As a result, the company & Xbox may face changes in the political parties that cause the cost of the product to increase or decrease, but overall the product, its process, and production are not significantly affected, except in places where it is manufactured (Panmore Institute, 2017).

Economical

 According to Murphy, (2018) Xbox remains a luxury item and does not form a part of the basic needs in most middle-class houses. These dynamics have been somewhat changed by changing trends among the youth. As more people become involved in playing video games, more value is associated with the product. The youth is willing to spend money on these luxury products and future upgrades as well. Xbox also has the opportunity to sell different specific add ons for video games, thus expanding its market and profitability. Sales of a product depend on disposable income. The higher the disposable income among the population, the better the sale. It also depends on the market rate of the different competitive products and services on the market. The company is also facing losses due to fluctuating currency rates. If the fluctuations are high, the profitability will also be affected. Various other changes in monetary policies, such as GST or duties, will increase or decrease the cost of Xbox, directly affecting sales (MBA Skool, 2019).

 Social

According to the Business week (2013), there is a rise of the number of people playing Xbox, moreover, A women revolution has accrued in the gaming industry as the reports identifies a rise in the number of women playing games. However, despite this increase, it has been reported that measures are being taken in order to reduce gaming to increase a healthier lifestyle for people.

 Technological

 The technological changes have a deep effect on the sales of Xbox and it can easily dismantle the price structure in a short period of time. Therefore, in order to do the right changes a high amount of money needs to be invested in Research & Development (R&D) for the Xbox and it is extremely important to constantly innovate (Marshall, 2020). In addition, Xbox should focus on AI and Virtual reality because of the realistic experience it gives and they are highly demanded by the players. Thus, it is important to constantly innovate in technology not only for maximizing the company’s profit and leading the market but to stop any obsolescence in the near future. Finally, if the company got profits that are high in number they can reinvest them in R&D so that the company insures a sustainable profit over a long period of time (Mbaskool, 2020).

Environmental

 Being aware of the surrounding environment is essential for any organization in order to determine their current market position and set their future goals. According to Brady et al. (2007), the organization must have the knowledge about their competitors, the types of sales strategies followed by their competitors, the potential threats, the factors affecting the product sales. Hence, the environment of Xbox faced a solid competition from the beginning from its main competitors such as, Sony PlayStation 2 (PS2), Nintendo’s GameCube and Sega’s Dream Crest (Morgan, 2012). Therefore, it is observed that Xbox is facing high threats from its competitors. However, Microsoft is working on taking measures to meet this threat by introducing new innovations.

 Legal

For Xbox to expand its reach in the market it needs to stay updated with all the copyrights and international patents existing in the region it is willing to enter. In addition, Xbox needs to be careful about all of its products since gaming parts can be similar to others and that can be classified as infringement (Xbox, 2020). Xbox needs to follow the various labor laws and act according to it. To start with the discrimination laws are important to make sure that the employees in Xbox are treated fairly and given the same opportunities. Secondly, the health and safety laws need to be implemented not only due to the law but also Xbox’s personal feeling of ethical and social responsibility to other human beings. Finally, Xbox needs to take care of the various anti-bribery laws that are in different countries where Xbox is operating in (PESTEL, 2020).

 Customer Analysis

 While the tendency of playing video games declines with age, there are large number of consumers from different age groups, report playing, including one third of men and women aged 55 and older (Kaufman et al., 2016). This illustrates that the gaming industry gratifies to diverse and larger audience and the concept of those gamers are rapidly changing that includes various age, gender and other ethnic backgrounds. It appears that one third of adults who plays video games don’t prefer much of in-app purchases, and 26% agrees that video games are waste of time (DUGGAN, 2015). In regard to cost of gaming, providing games that consumers wants with challenges which speaks the significance of free trials and demos. However, the free trail game models can potentially address this cost of issue, leading consumers to spend money for longer run. As digital platform becomes more popular for the console game markets and computers, it is more likely there would be alternate monetization models which will arise and become more successful on these platforms as well. Moreover, in the computer gaming space, it is already occurring through the accomplishment of widely popular games which is free of charge (Frick, 2013). Given that large number of adult gamers who does not like in app purchases, xbox one needs to address this negative perception that many consumers have regarding to this model.

 Competitor Analysis

 Microsoft Xbox entered the gaming industry with a well-planned strategy and succeeded in gaining its position in the market by becoming one of the most known brands in gaming globally. Microsoft Xbox created its competitive advantage in the gaming market through these strategies (Wikidot, 2018). Frick, (2013) stated that Microsoft Xbox focused intensively on product development, recognizing that it is very important for their products to stand out. Microsoft Xbox continued to introduce changes and advancements to its products in order to stay in the competition and become the leader in the gaming industry, and they did so by launching their highly coveted console called Microsoft Xbox 360 (Xbox, 2020).

Furthermore, with much research and development put in their new product, Microsoft Xbox was able to improve the processing power, graphics and other features like Xbox Live, which made their product more competitive and customers were well received. (the price) By making gaming interactive through streaming services, they further enhanced the players’ experience (Frick, 2013).

 When Xbox 360 was launched the customer service and marketing strategy was to offer a 3 years’ hardware failure warranty and to make sure that there is availability of a vast range of accessories and games that can be upgraded (Wikidot, 2020). In addition, by using the Xbox console connected to their TV, users can enjoy all other features offered through Microsoft’s alliances. For example, Live, streaming, Netflix and other interactive services that makes them able to connect with other users around the world. So, these features make Xbox stand out in the gaming market all around the world. Finally, the sale of the product was recorded in the Guinness book of world records as the fastest selling electronic and one of the largest sold out products (Xbox, 2020).

Company Analysis

 Microsoft was founded on April 4, 1975 by Bill Gates and Paul Allen, the company started as a basic computer program language then made its first operating system for personal computers designed by them then moving to developing products that includes both hardware and software (Ichbiah et al., 1991)  and till our current time the company has not stopped developing as the last product they introduced is the release of Windows 10 which is the last realised operating system. the company has always wanted to expand its product portfolio particularly in the videogame industry despite considering it as a very risky investment (Halter, 2006). Therefore, Microsoft announced to the world in the fall of 1999 that they will be entering the videogame console business with its own technology advanced which is the Xbox targeting old male at the age of 18 to 34 (Soylucicek, 2017).

Microsoft largely manufactures the primary parts of the Xbox and limited parts are supplied by Nvidia and have limited bargain price. Moreover, Micro soft has adopted multiple distribution strategies in order to reach its target customers which includes Walmart, Best But, Target, Tesco and Amazon which is the same distribution strategy that is used by its competitors except some minor differences (Engebretson et al., 2013). The Xbox was Microsoft first foray into the gaming console market as a part of the six generation of gaming, then comes the second generation which is the Xbox 360 competing with WII and PS3 as a part of seventh generation of video game consoles, the last Xbox Microsoft released was the Xbox one which is the third generation and was a part of the eight generation of video game console (Bolt and Liles, 2011).

SWOT Analysis

STRENGTHS:

• Xbox is recognizable for investing in strong brand portfolio. This helps the company to progress further without the need of creating brand awareness in addition to being known as a platform seller of Microsoft.
• The existing ability to cope up with any resistance such as the scaling up and scaling down of products according to company demand along with efficient automation of activities allowed Xbox to maintain consistency on their quality.
• The already built up financial power of Microsoft (45.75% ratio of operating sales in 2003) compared to the competitors was noticeably 14 times lower than Sony (3.31%) and Nintendo (22.50%). Therefore this allowed the level of dominance to rise and led to investing $500m in marketing the Xbox (Sony Corporation, 2003) and (Nintendo, 2003)

WEAKNESSES:

• The Research and Development of Xbox is considered to be minimum in comparison to their rivals with highly effective and innovative products such as Nintendo even though their expenditure is less compared to Xbox investment.
• Xbox faced complications regarding maintaining integration accordingly due to not having an optimum organizational structure which resulted in failure of accomplishing market share aimed at vertical integration.

OPPORTUNITIES:

• Virtual reality- This could be number one opportunity for Xbox as oculus rift from facebook is moving up fast. Even though the controllers for oculus were initially made by Microsoft, later Oculus soon started manufacturing unique controllers (AR/VR, 2020). VR is the future for gaming and social interactions and Xbox needs to catch up soon.
• Exclusive games- The reason PlayStation is ahead of Xbox because of their development of new exclusive games launched in their gaming consoles. Microsoft has limited games in which Xbox brand is platform seller, so therefore they need to come up with new games to increase their sales.
• Online gaming- online gaming is speeding up in great way. Also small developers are catching up with genius games and Xbox should capitalize on this heavily of the internet and expand its own arcade online games with enhanced content and features for gamers. For instance, Xbox could develop downloadable content and inter-game chat features which are booming nowadays in online games.

THREATS:

• Drop in console sales- it is one of the major concern for Xbox as the overall console market is dropping drastically in terms of sales and on top of it, Microsoft is only 43% of PlayStation sales (Tury, 2020).
• Mature markets- the people in markets are maturing which means they are already having either an Xbox or PlayStation and only repeated customers are purchasing the game consoles.
• Constant competition- Xbox consoles have been in constant competition with the playstation. Bases on the information from videogame publishers, the company is trailing Sony by a fair large margin (Tury, 2020). This effects the bottomline as well as the topline of the company. Microsoft Xbox is unable to break shackles and come top 1. Hence, the market is dynamic in nature and from time to time Xbox has to reinvent itself.

• ANSWER

•  Xbox Marketing Audit: Understanding the Competitive Landscape and Future Opportunities

  Introduction

  A marketing audit is a comprehensive analysis of an organization’s internal and external environment. In the case of Xbox, Microsoft’s gaming console brand, it is essential to conduct a thorough situational analysis to understand the factors impacting its market position. This essay provides an overview of the PESTLE analysis, customer analysis, competitor analysis, and company analysis of Xbox, followed by a SWOT analysis highlighting its strengths, weaknesses, opportunities, and threats.

  PESTLE Analysis

  Political

     – Political factors, such as trade wars, can impact Xbox’s sales in specific regions.

     – Changes in political parties can affect production costs, but overall, the gaming industry remains unaffected.

   Economical

     – Xbox is considered a luxury item, but changing trends and increased value associated with gaming have expanded its market.

     – Disposable income and market rates of competitive products influence Xbox’s sales.

     – Fluctuating currency rates and changes in monetary policies can affect profitability.

  Social

     – Xbox has seen a rise in the number of players, including women, but measures are being taken to balance gaming with a healthier lifestyle.

  Technological

     – Technological advancements strongly influence Xbox’s sales, requiring significant investments in research and development (R&D).

     – Focus on AI and virtual reality (VR) is crucial for innovation and staying competitive.

     – Reinvesting profits in R&D ensures long-term sustainability.

   Environmental

     – Xbox faces solid competition from competitors like Sony PlayStation and Nintendo.

     – Microsoft aims to meet these threats through new innovations.

  Legal

     – Xbox must comply with copyrights, patents, labor laws, and anti-bribery laws.

     – Ensuring fair treatment, health and safety, and ethical responsibility are vital for Xbox’s operations.

  Customer Analysis

  – The gaming industry caters to a diverse audience, including various age groups, genders, and ethnic backgrounds (Campbell & Cunningham, 1983).

  – A significant portion of adult gamers dislike in-app purchases, and cost plays a role in their gaming preferences.

  – Offering free trials and demos can address cost concerns and encourage longer-term spending.

  – The rise of digital platforms and alternate monetization models presents opportunities for Xbox.

  Competitor Analysis

  – Microsoft Xbox established its competitive advantage through product development and continuous improvements (Ghoshal & Westney, 1991).

  – Xbox 360’s features, customer service, and marketing strategies contributed to its success.

  – Microsoft’s alliances and interactive services differentiate Xbox from competitors.

  – Xbox has achieved recognition for its sales records and global brand awareness.

  Company Analysis

  – Microsoft, founded in 1975, expanded its product portfolio with Xbox despite considering it a risky investment.

  – Xbox’s manufacturing process involves both internal and external partnerships.

  – Xbox’s journey includes three generations of gaming consoles, with a focus on technological advancements and distribution strategies.

  SWOT Analysis

  Strengths

  – Strong brand portfolio and association with Microsoft.

  – Ability to scale products and maintain quality.

  – Financial power compared to competitors (Gurl, 2017b).

  Weaknesses

  – Lower investment in research and development compared to rivals.

  – Challenges in maintaining integration and market share due to organizational structure.

  Opportunities

  – Embracing virtual reality and capitalizing on its potential.

  – Developing new exclusive games and expanding online gaming offerings.

  – Leveraging the internet to enhance content and features for gamers.

  Threats

  – Decline in console sales and competition from PlayStation.

  – Maturing markets with repetitive customer purchases.

  – Constant competition and the need for Xbox to reinvent itself.

  Conclusion

  This marketing audit provides insights into Xbox’s current market position and factors influencing its performance. Xbox’s brand recognition, financial strength, and ability to adapt to technological advancements are significant strengths. However, weaknesses in R&D investment and organizational structure need to be.

  References

  Campbell, N. C. G., & Cunningham, M. (1983). Customer analysis for strategy development in industrial markets. Strategic Management Journal, 4(4), 369–380. https://doi.org/10.1002/smj.4250040407 

  Ghoshal, S., & Westney, D. E. (1991). Organizing competitor analysis systems. Strategic Management Journal, 12(1), 17–31. https://doi.org/10.1002/smj.4250120103 

  Gurl, E. (2017b, August 11). SWOT ANALYSIS: A THEORETICAL REVIEW. https://demo.dspacedirect.org/handle/10673/792 

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