Comment Re:Great question, sherlock! (Score 3, Interesting) 66
Hey,
MS is using a sales tactic that has been used by other companies in the past. I have been in sales and marketing for nearly 20 years and have seen this many times.
What has happened is that MS wants to sell Japan more than anywhere else. They are ok with their sale here at home and so so in Europe. But they time and again have stated that they must sell in Japan.
There were several routes that could have been taken, and the one they have used is the most risky and only a very bold or arrogant company would attempt it i.e. Phillip Morris, but it can potentially give you incredible leverage in the market.
This is very easy to see if you have seen it done; which I have by many companies in the past. First you use your current business partners(EB and Gamestop)to field the market;doing presells to be able to project sales. This is something that is done on the wholesale level everytime a new product is brought to market, and occasionaly with retail to fine tune marketing strategies. What MS did was to give EB and Gamestop an allocation of guranteed product by a specified ship date. EB and Gamestop did not oversell their preorders, instead MS cut their initial allocation by 60 percent.This is unheard of for presells, normally the product ship date is readjusted to a time when the presells could be met,this protects the distributors.EB and Gamestop were being used by MS, both of these game distributors have wrestled with console launchs before and do not want to damage their relationship with their customers.MS launched with the shortfall at the expense of their loyal distributors.
However this is the risky part of this sales strategy, in order to create a demand in a non existing market you must limit supply in existing one.Example; I don't ship the C store near your favorite candy bar, I tell that C store that I cant get enough from manufacturer. I then go down the road and sell it to another C store that has never bought them from me before but now is ready because the people who couldnt find them other places is in his store now asking for them.
As I said it is risky because you jeopardize your relationship with your current customer base, but it is a way to get in another market without very much extra advertising. If the shortage in USA and the craziness on EBay had worked, Japanese consumers would have bought them as many people here have simply for their resale value, which doesnt' matter just so long as it generates positive sales figures.
I think that MS has used the shortfall in USA to gain ground in Japan, the reason you all are having a hard time thinking that is because it seems to have failed at this point. That is why few companies will risk it.
MS is not the first to exploit their customer base and will not be the last.
MS is using a sales tactic that has been used by other companies in the past. I have been in sales and marketing for nearly 20 years and have seen this many times.
What has happened is that MS wants to sell Japan more than anywhere else. They are ok with their sale here at home and so so in Europe. But they time and again have stated that they must sell in Japan.
There were several routes that could have been taken, and the one they have used is the most risky and only a very bold or arrogant company would attempt it i.e. Phillip Morris, but it can potentially give you incredible leverage in the market.
This is very easy to see if you have seen it done; which I have by many companies in the past. First you use your current business partners(EB and Gamestop)to field the market;doing presells to be able to project sales. This is something that is done on the wholesale level everytime a new product is brought to market, and occasionaly with retail to fine tune marketing strategies. What MS did was to give EB and Gamestop an allocation of guranteed product by a specified ship date. EB and Gamestop did not oversell their preorders, instead MS cut their initial allocation by 60 percent.This is unheard of for presells, normally the product ship date is readjusted to a time when the presells could be met,this protects the distributors.EB and Gamestop were being used by MS, both of these game distributors have wrestled with console launchs before and do not want to damage their relationship with their customers.MS launched with the shortfall at the expense of their loyal distributors.
However this is the risky part of this sales strategy, in order to create a demand in a non existing market you must limit supply in existing one.Example; I don't ship the C store near your favorite candy bar, I tell that C store that I cant get enough from manufacturer. I then go down the road and sell it to another C store that has never bought them from me before but now is ready because the people who couldnt find them other places is in his store now asking for them.
As I said it is risky because you jeopardize your relationship with your current customer base, but it is a way to get in another market without very much extra advertising. If the shortage in USA and the craziness on EBay had worked, Japanese consumers would have bought them as many people here have simply for their resale value, which doesnt' matter just so long as it generates positive sales figures.
I think that MS has used the shortfall in USA to gain ground in Japan, the reason you all are having a hard time thinking that is because it seems to have failed at this point. That is why few companies will risk it.
MS is not the first to exploit their customer base and will not be the last.
