complete the case studies 1-3

Case Study 1

Harmonix

Little more than three years ago you had probably never heard of Harmonix. In 2005 the videogame design studio released Guitar Hero, which subsequently became the fastest videogame in history to top $1 billion in North American sales. The game concept focuses around a plastic guitar-shaped controller. Players press colored buttons along the guitar neck to match a series of dots that scroll down the TV in time with music from a famous rock tune, such as the Ramones’ “I Wanna Be Sedated” and Deep Purple’s “Smoke on the Water.” Players score points based on their accuracy. In November 2007, Harmonix released Rock Band, adding drums, vocals, and bass guitar options to the game. Rock Band has sold over 3.5 million units with a $169 price tag (most videogames retail at $50–60). In 2006 Harmonix’s founders sold the company to Viacom for $175 million, maintaining their operational autonomy while providing them greater budgets for product development and licensing music for their games. Harmonix’s success, however, did not come overnight.

The company was originally founded by Alex Rigopulos and Eran Egozy in 1995, focused around some demo software they had created in grad school and a company vision of providing a way for people without much musical training or talent to experience the joy of playing and creating music. The founders believed that if people had the opportunity to create their own music, they would jump at the chance. Their software, which they eventually dubbed The Axe, provided basic music composition tutorials and allowed participants to use a joystick to improvise solos along to popular music tracks. They attempted to market their creation through an interface with Japanese karaoke machines, a demo package deal with Intel, and even in an exhibition at Disney’s Epcot. And while the software always proved technically impressive, people generally expressed little initial interest in trying it out, or else it just didn’t seem like they were having much fun.

In 2000, Rigopulos and Egozy hit on a concept that would engage consumers, and Harmonix became a videogame company. Where The Axe software provided an improvisation program with no set goal, most videogames were designed with a purpose and offered competition, which helped engage, direct, and motivate players. At the time, the market for music-based games had not fully developed, but especially in Japan, rhythm-based games, in which players would tap different combinations of buttons in time with a beat or a tune, were becoming increasingly more popular. Harmonix created two games, Frequency and Amplitude, in which players hit buttons along with a beat, unlocking tracks for different layers of instruments in a song. Neither of the games proved especially successful, however, as both were very complex and the expense of generating initial interest proved too high for their publisher, Sony, to continue funding them.

Harmonix finally found some measure of success in its 2004 release of Karaoki Revolution, in which players would use a microphone or headset peripheral to score points singing along to pop songs. In a way, it allowed gamers to play the role and be a part of the music. In 2005, when Red Octane, a company that had found success making peripheral videogame controllers, contacted Harmonix about creating Guitar Hero, their philosophy for attracting gamers was based off a similar concept. Guitar Hero put players in the role of the lead guitarist in a rock band, climbing its way to stardom. The game soundtrack, filled with remixes of classic American rock ‘n’ roll hits, would appeal to a broader musical audience and the guitar controller put the iconic instrument of American rock ‘n’ roll directly in the player’s hands. The game was released in November of that year, and when retailers set up in-store demo kiosks, game sales went through the roof. After the success of the first game, even real rock stars began to pick it up, demonstrating its broad appeal. Music labels started to jump on the bandwagon, allowing the licensing of actual songs rather than just composition rights. Rock Band 2, which came out in September 2008, includes songs by AC/DC and Bob Dylan. Gamers can also download additional songs, like The Who’s greatest hits, onto their Xbox 360s and Playstation 3s at $1.99 per song, only a dollar more than purchasing a song from Apple’s iTunes music store. Licenses for Rock Band have even been secured for songs by the Beatles, which have yet to be licensed to iTunes or other electronic media stores. As the market for music videogames has matured, sales are now expanding beyond the traditional gamers to first-time gamers and even families. The Rock Band franchise has sold over 5 million units since its release in 2007, and with the release of Rock Band 2, the hits just keep on coming.

1. What marketing management philosophy did Harmonix use at first and how did their philosophy change?

2. As a firm, how do you think Harmonix would describe its business?

3. To whom was Harmonix’s product directed and how did it create a product that would appeal to that audience?

Case study 2

Disney: The Happiest Brand on Earth

In 2006, Disney’s Pixar released the hit movie Cars, which grossed $462 million worldwide. Since then, Cars merchandise has generated over $2 billion in sales each year. Pixar has since created a series of Cars shorts to be aired on the Disney Channel with a subsequent DVD release. A Cars sequel is in the works for 2011, and an online virtual gaming world is set to release 2009. In 2012, Disney’s California Adventure theme park will open its 12-acre Cars Land attraction.

At Disney, the brand is the name of the game, and cross-platform success of the Cars franchise is by no means the exception to the rule. Disney also has the Jonas Brothers, Hannah Montana, High School Musical, the Disney Princesses, Pirates of the Caribbean, and the list goes on and on. The man behind the magic is Disney’s CEO, Bob Iger, who has lead a dramatic revitalization of the Disney brand since succeeding longtime head Michael Eisner in 2005. When he first took the post, his strategy shifted Disney’s focus around its stable of “franchises.” These franchises are distributed across Disney’s multiple company platforms and divisions, such as Disney’s various television broadcasts platforms (the Disney Channel, ABC, ESPN), its consumer products business, theme parks, Disney’s Hollywood Records music label, and Disney’s publishing arm in Hyperion just to name a few.

His franchise strategy has been supported by the other major move he made upon first becoming CEO. On his first day on the job, Iger told the board that revitalizing Disney’s animation business was a top priority, which would be improved through the purchase of Pixar. As part of Iger’s franchise strategy the deal made perfect sense, as many of Disney’s latest TV shows, Disneyland rides, and merchandise was based of Pixar characters.

Finding a new market to push the Disney franchise became a priority as well. With the Disney brand growing flat, it was becoming evident that Disney had missed some opportunities for broader success due to a narrowing of its target market, which was at the time largely associated with younger children.

Iger’s first move was to broaden Disney’s viewership by moving the Disney Channel from premium to basic cable and launching local versions in key global markets. Then, Disney began pushing franchises to capture the rapidly growing tween market. Putting its support behind the Disney channel’s High School Musical and Hannah Montana and the Jonas Brothers who were emerging out of Disney’s music label, Disney quickly generated a series of franchise juggernauts in the tween-girl market.

Though Disney’s focus has remained on family-friendly fair, Iger has shown a new willingness to look to even broader markets, if it fits with the Disney brand. Disney’s Pirates of the Caribbean, the first Disney film with a PG-13 rating, played a major role in refocusing the brand, being based off the classic theme park ride, and it also helped expand the Disney appeal older kids and even adults. The Pirates and Cars franchises also provided preliminary steps for Disney’s latest endeavors to crack the tween boy market, age 6–14, one traditionally difficult for media companies to sustainably capture. Their efforts focus around the new Disney XD channel, with a broad range of offerings, such as potential new franchises like the science fiction action-adventure show “Aaron Stone” and showcases of new musical talent. Disney will also be able to leverage ESPN to create original sports-based programming. The channel will be accompanied by a Disney XD Web site, which will promote the channel’s programs, as well as offer games and original videos, social networking, and online community opportunities.

As it continues to expand and provide new franchise offerings, Disney looks to have relatively strong momentum, even in the midst of rising economic challenges. As Jobs puts it, “Family is a renewable resource,” and right now, Disney is making the most of it.

1. Do a brief market opportunity analysis for Disney, identifying the major markets that Disney has expanded into.

2. How does Disney’s cross-platform franchising help create sustainable competitive advantage?

3. Describe the marketing mix for one of Disney’s franchises.

4. Describe the major components of Bob Iger’s strategic plan when he first became CEO.

Social Responsibility 3

Purpose: Many companies today are concerned with social responsibility. They may pursue philanthropic activities and/or strive to be ethical. Your goal for this assignment is to evaluate how firms are being socially responsible. Limit your answers to one page and provide a print-out of the Web site you visited.

Choose a company and find that company’s Web site on the Internet.

Look for information that tells about the firm’s efforts to be socially responsible. ( look for things like news releases, company information, information about community programs, etc.)

Prepare a report that describes you findings and explain why you think the company is involved with the activities they describe.

Answer the following questions:

Do the activities described on the Web site seem consistent with the company’s products?

Why or why not? (For example, a shoe company may sponsor a race that raises money to help prevent a disease. People who participate in the race may use that company’s running shoes and therefore the race would be consistent with the company’s products.)

Evaluate how effective you think the information is in terms of how it is presented, what impact it might have and whether it will help to sell the company’s products. Do they support any claims they make.

Does the information collected during this activity improve your evaluation of the company?

Would it influence your decision to buy the company’s product? Why or why