Sony To Revamp $5B AD Spend As Desperation Sets In

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As Sony ramps up to relaunch their struggling brand around the 2010 Soccer World Cup senior executives in the Company are moving to totally restructure Sony marketing after admitting that brands like Samsung, Nintendo, Apple and Panasonic have done a “far better” job than Sony during the past 18 months.

Currently Sony spends around $5.5 Billion annually marketing their brand around the world. In Australia the bulk of Sony’s marketing dollars are spent on TV and retailer catalogue advertising. Little is spent on vertical consumer electronic publications web sites or technology magazines.


Instead Sony Australia has an army of PR executives whose primary objective is to solicit free PR in trade and consumer publications. They also target tame journalists who write positive stories about Sony, but fail to report Company losses, product recalls or anything negative about the Company. This is despite the fact that brands like Samsung, Nintendo and Apple are pounding Sony into the ground when it comes to market share and profits. 

In Australia this  has not worked of late with Sony market share in the TV, digital camera, camcorder, notebook, phone, gaming and Blu ray market slipping as brands like Apple, Nintendo, and Panasonic in the digital camera market and Samsung in the TV market, rip market share away from the Japanese consumer electronics Company.  

Now Sony is looking to use flat panel TV and a focus on a smaller number of products to “reinvent its marketing”, senior executives at the company said.

Sony admits that it is being outgunned by competitors that spend heavily to promote specific products or categories, such as Apple with the iPod or iPhone, Samsung in televisions, or Canon and Panasonic in digital cameras.

According to the Financial Times the new model would see more of Sony’s marketing budget spent on specific products with the potential to succeed, such as a new television due for sale next year. “We cannot just rely on the brand to sell products,” one executive said.


Another big problem for Sony is the quality of their products. In the past Sony manufactured many of their own products. But due to mass sackings, billion in losses and the closure of factories the Company has resorted to third part manufacturers Companies in Taiwan, China and Vietnam now manufacturing for Sony.

 

The Company is also licensing LCD TV technology from brands like Vizio who are fighting it out with Samsung for the #1 slot in the US TV market. Sony has slipped to third.  

According to company filings, Sony spent $5.5 Billion on advertising last year. They failed to deliver a single cent in profits.

On the other hand Apple spent $501 Million advertising only 4 product categories; they also delivered a massive profit in the last quarter of US$1.67 billion this was up from $1.14 billion, for the same quarter a year ago. Revenue rose to $9.87 billion, from $7.9 billion last year.

While Sony has made constant losses, brands like Apple and Samsung are delivering record profits as consumers turn off the Sony brand. In the last quarter Samsung delivered a profit of $3.5 Billion while Sony reported losses of over a billion dollars.

The revue of Sony’s advertising spend comes at a crucial time for Sony as the Company struggles to stem their losses. Sir Howard Stringer, chairman and chief executive, will brief investors and the media on Thursday on the strategy of his new management team, which took over in April of this year.
Currently Sony is banking on turning their TV fortunes around with new OLED TV’s, 3D TV and camera technology, Blu-Ray players, film cameras, Play­Station games and movies.

However analysts are not as confident with several now tipping that Samsung, Panasonic and Apple along with a revitalised LG will continue to take market share away from Sony.

 

 

They also believe that quality issues are starting to emerge with Sony products, as the Company is forced to offer extended warranty on TV’s and Vaio notebooks which have witnessed several recalls or service bulletins this year due to product failures.

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