|Microsoft Zune | |Proposal | Background The market for portable music players has been an industry that continues to be innovative and in current years has been dominated by Apple products. Apple has been in the portable music industry since 2001 and the world has been forever changed due to their ever-popular iPod.
These hard-drive based systems allow consumers to take music with them on the go. In 2006, Microsoft introduced the Zune, an entertainment platform and portable media player to compete with Apple’s iPods.
Along with the introduction of this product Microsoft has also introduced the Zune Marketplace to compete with Apple’s iTunes. The Zune media player now has the ability to wirelessly connect to other Zune players and share their content. This wireless connection also allows the consumer to connect to the internet using a Wi-Fi connection.
The competitiveness for portable media players in the market place has caused innovation to drive success. Due to the popularity of the Apple iPod products Zune sales were far from the expected.
With this problem Microsoft has had to recreate the product to better fit the needs of the Target Market. Sales have been stagnant over the years but Microsoft is not willing to give up on their product just yet. In September 2009 Microsoft introduced its newest version of the Zune titled the Zune HD. Defined The major marketing problem that Zune faces is a product positioning deficiency.
The target market is either unaware of the Zune or not willing to try the Zune due to the competition, specifically the iPod. The Microsoft Zune needs to be re-positioned to meet the target markets needs and to be perceived by the target market as a unique and significant product. (“The Microsoft Zune” 2009). The Zune is an MP3 player that is being marketing against the Apple iPod. The product positioning problem exists where consumers identify the Zune as a second-hand or knock-off iPod. The Zune has different benefits than the
Apple iPod which need to be made known, for example Zune Marketplace allows you to purchase its “Zune Pass Subscription” allowing for unlimited music for one low monthly fee. Targeting a niche type market, such as music enthusiasts, will help Zune become its own brand and make an impact on the market. One of the symptoms that have led to a product positioning problem is the lack of savvy promotions and advertising. Consumers perceive the Apple iPod as a “fashion” accessory, its iconic commercials becoming an advertising phenomenon, whereas the Zune is perceived as functional but not “fashionable. (“The Microsoft Zune” 2009). Consumers seeking information on the Zune must rely on news and other information outlets rather than relying on the concise efforts of Microsoft’s marketers. In this way low awareness is a challenge that must be overcome in order to re-position the product. Another symptom that has led the Zune to be ineffective in the market place is a branding issue. With the mass market using the term “iPod” as the generic name for any music device, people mistakenly view the Zune as simply another Mp3 player, when in fact it encompasses more. Zune owners can act as their own DJ, sending streaming music content to up to four other devices, according to documents filed with the Federal Communications Commission . With the device’s wireless networking abilities turned on, people can send and receive photos, as well as “promotional copies of songs, albums and playlists,” according to the filing, made public Thursday. (Fried, 2006)” Until Microsoft can re-position its Zune as a separate, advanced music device in the minds of consumers, it will be destined to be overshadowed by the industry leaders.
Scope Microsoft’s channels of distribution consist mainly of online and retail outlets. Retail outlets that carry the Zune include Wal-Mart and Best Buy. Internet retailers such as Amazon. com, Wal-Mart. com, and Buy. com also sell the product. Microsoft also has an exclusive store that sells Microsoft products. To meet all of its geographical customer needs Microsoft also sells the Zune on its website. Recently Microsoft has lost the rights to sell Zune products in Target retail stores due to complications of the market place.
The pricing of the Zune HD has given Microsoft a competitive advantage over its competitors. The Zune HD pricing makes the device much more affordable than the iPod Touch. A sixteen gigabit Zune model cost the consumer just as much as an eight gigabit unit of the leading competitor. The Zune HD now sells for $199. The competitor’s thirty-two gigabit unit costs $299, while the Zune HD thirty-two gigabit unit only costs $270. Lastly, the iPod’s version of the sixty-four gigabit unit will cost $399 and the Zune HD will cost only $333.
Microsoft’s strategy of underselling the competitor should make their product catch the eye of the consumers and hopefully result in more sales. Loss of products and consumers due to hardware or software is always unacceptable. There have been reports that the Zune tends to “freeze”, the screen goes blank, it randomly reboots itself and the battery fails without explanation, among other malfunctions. If the Zune expects to grow, these issues must be corrected Implications The loss of business, brand value, and market share value would be cause for our company’s concern.
The chance of losing customers could become greater with the threat of them trying the Apple product and liking it, therefore a loss of a customer to another competitor. The consumers that were once loyal to Microsoft may become loyal to Apple due to this process. With the introduction of the new Zune HD product in response to the Apple iPod touch, Microsoft still has resulted in lack luster profits. Loss of business has happened with the recent dropping of the Zune line at Target brand retailers. Now all consumers can get at this retail location are the Apple based music player devices. Microsoft, which had access to as much hardware development expertise as any company in the world and the capital to support a massive marketing budget for new products failed completely in its attempt to get a large part of the iPod market (McIntyre). ” This industry of MP3 players is a cat and mouse race with innovation causing quick imitation. Since 2006 the Zune has consistently been seen as an imitation chasing the true innovation. Motivation Portable music players are an interesting topic to investigate for consumers and marketers alike.
Since we are in the age group that these products are targeted for we have been around these products frequently without owning one ourselves. This is one of the key motivations in choosing this product for our project. Also since we are all Microsoft users ourselves we find it interesting that consumers will not even acknowledge that Microsoft has a portable media player when deciding to buy one. Many of us, for instance, own Microsoft computers but Apple music devices. With the hype over Apples products increasing everyday Microsoft will have to intensify their efforts to become a strong competitor to the Apple’s iPod.
With our background in marketing we believe that we can help create a new marketing strategy that will propel the Microsoft Zune into a new area of sales that it has never reached before. Finally, we are in an economy where consumers will pay top dollar for products that bear the Apple logo and we don’t understand why they wouldn’t pay the same for a similar product from Microsoft. Since the music industry is in the digital age, new products and ways to listen to music come out what seems like almost daily.
This will allow us, as marketers, to be very innovative when it comes to creating a new marketing strategy for our product. Citations Cardino , F. (2010, January 12). Zune is getting worthwhile update. Retrieved from http://www. geardiary. com/2010/01/12/zune-hds-getting-a-worthwhile-update-smart-dj-and-mpeg-4-support-have-arrived/ Carry hd music and movies anywhere. (2009). Retrieved from http://www. popsci. com/bown/2009/product/microsoft-zune-hd Ceuno, A. Z. . (2007, November 5). Microsoft changes its marketing tune for lackluster Zune. Advertising Age, 78(44), 4-39.
DiMonda t, Las Scott . (2009, September 17). Software problems. Retrieved from http://www. platformnation. com/2009/09/17/zune-software-problems/ Fried, I. (2006, August 25). Microsoft’s zune aims to be social butterfly. Retrieved from http://news. cnet. com/2100-1041_3-6109667. html Gideon, T. (2008, January). Microsoft masters digital music. PC Magazine, 27, 32-32. McIntyre, Douglas . (2009, May 14). The 10 biggest tech failures of the last decade. Retrieved From http://www. time. com/time/specials/packages/article/0,28804,1898610_1898625_1898633,00. html Mediati, N. & Mics, G. (2008, December). New ipod nano, Zune players face off. PC World, 26(12), 66-66. Taylor, C. (2007, October 10). Microsoft re-aims at Apple’s PMP market dominance with Zune upgrades. Electronic News (10616624), 53(41), 33-33. Wildstrom, S. H. (2009 , September 28). What could make the Zune zoom. BusinessWeek, (4148), 90-90. Zune vs ipod comparison chart. (2009). Retrieved from http://www. zunescene. com/comparison/ The Microsoft zune hd dilemma. (2009, Ocotober 1). Retrieved from http://forum. ecoustics. com/bbs/messages/34579/594080. html
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