Consumer Behaviour Major Report ~Nintendo Co., LTD.

Question: What are the consumer behaviour trends in gamer’s decision process when purchasing console games, and how does that influence Nintendo?

1. Background and Context

1.1 Nintendo Development History

Nintendo started in Kyoto, Japan as manufacturer of playing cards. Since the 1970’s, however, Nintendo has been one of the largest and most successful video game and home entertainment corporations in the world. Their most notable achievements are the innovative home gaming devices that allow consumers to play video games on the TV. Nintendo invented five of these home gaming consoles including the Nintendo Entertainment System (NES) in 1985, the Super Nintendo Entertainment System (SNES) in 1991, the Nintendo 64 (N64) in 1996, the Nintendo GameCube in 2001, and the Nintendo Wii in 2006. In 2011, Nintendo announced the development of it’s 6^th home gaming console, the WiiU, due to be released in 2012.

Nintendo has also developed numerous portable gaming consoles including the Game Boy in 1989, the Game Boy pocket in 1996, the Game Boy Advance in 2001 (redesigned in 2003), the Nintendo DS in 2004 (redesigned in 2006 and 2008), and the Nintendo 3DS in 2011.

As well as producing gaming console hardware, Nintendo has also developed gaming console software. Among the most famous Nintendo gaming software franchise titles are the Legend of Zelda, Pokémon, and the iconic Mario.

1.1 Nintendo Mission and Objective

Nintendo’s mission is not directly stated, but its website (Nintendo Co. 2011) declares that Nintendo’s mission is to produce and market the best quality goods and services to its consumers, whom they treat with consideration, respect and attention. Nintendo closely listens to its customers to help improve its products and services.

1.2 Console Gaming Context

The video gaming world has evolved within recent years. The vast age range of gamers and the high level of significants gamers are now placing on the hobby are some of the arising trends that have emerged in recent gaming culture since the establishment of the three gaming console giants- Nintendo, Sony and Microsoft.

2. Secondary Research in Gamer Consumer Behaviour

2.1 Consumer Behavior Report~ December 2007: Video Gaming Trends by PriceGrabber.com

A 3,309 respondent survey performed by PriceGrabber.com (PriceGrabber.com 2007) found several console gamer consumer behaviour trends including:

· During the pre-purchase stage of searching, consumers use two main sources: (1) Online Websites, including blogs, and (2) recommendations from family and friends.

· During the pre-purchase stage of evaluation, consumers value the attribute of Game Selection most, which is then closely, followed by (in order) Ease of Use, Price, and High Definition Graphics and Playback. Online Capability was by far (at 5%) the most unimportant attribute.

· The animated/ child-friendly video game genre ranks highest in popularity

· And, a decreasing trend in videogame console prices drive consumers to buy

2.2 Effective Affective User Interface Design in Games by Daniel Johnson and Janet Wiles

A 2001 academic research paper by the University of Queensland, Australia (Johnson and Wiles 2001), identified the motivations of gamers’ purchases, as well as measurement of gamer’s post-purchase evaluation of satisfaction. Findings include:

· Gamers’ primary motivation when choosing a game is to experience positive affect of task and goal orientated game play. This can consist of saving the princess, annihilating the enemy, or win a football game.

· Flow- the euphoric state of concentration and involvement- is the most important factor to achieve this positive effect. The components of flow in a video game include the presence of a complete-able task, the ability to concentrate on the task, the task having clear goals, the task provides immediate feedback (points, the vanquishing of a foes), deep but effortless involvement, exercising a sense of control over action taken, self-emersion during flow activity, and sense of duration of time is altered (an hour playing a game only feels like ten minutes).

· In relation to these components: immersion in a game is promoted when all distractions are removed; a better level of concentration and engagement is achieved when game mechanic controls (the pressing of buttons on a game remote control) are easy to remember; and the joy of success is dependent upon the possibility of failure.

3. Primary research- Survey

For primary research I launched a three-week open survey that consisted of 28 questions. Because the survey was aimed towards Nintendo gamers, participants included Nintendo fan forum users, Facebook and Twitter users, and family and friends. Of the 98 responses that were received 58.16% were experienced gamers, and 45.92% had a preference of Nintendo. The results are as followed:

3.1 Pre-purchase Processes: Need Recognition, Search and Evaluation

· Most respondents identified their need to purchase games with the upper-level need of self-actualisation of Maslow’s Hierarchy of Needs. The need of self-fulfilment and enriching experiences is evident in some respondents when asked what is the reason for buying console games: “To have fun with the games”, “Looking for a good time...”, “Boredom”, “To pass time or play specific games on the console that the gamer wants to play”

· Most respondents’ need recognition is triggered by the exposure of games, and is then needing the game because of their level of involvement in Nintendo or gaming. Example responses to the same question as above, include: “A game I would usually like is being released”, “I like to stay in the Nintendo franchise more than any other console”, “Part of a series that I enjoy”, “If it looks like fun or it's from a franchise that I like”, “Because I want one and can afford it”

· Depending on the game and familiarity with the franchise, research on a game evenly varies from an hour to a month. Some respondents declared that they deliberated for as long as 3 months to a year. 66.7% of respondents decided to buy (or not buy) a game after research (as opposed to after a review, or family/friend advice)

· Most external searches were done online with 35.2% using official gaming sites (such as Nintendo.com), 28.9% using blogs sites, and several other respondents using unofficial gaming websites, like ING.com and Gametrailer.com, and Youtube.com.

· Most respondent’ decisions were equally influenced by corporate branding (advertising, promotions, brand loyalty) and external independent sources and media (blogs, magazines, reviews)

· 77.9% of respondents felt the product was more important than the price when making a decision. And although most respondents said a preferable price for a game depended on the individual game, when it did come to price the average reasonable and preferable price to pay for a Nintendo 3DS game is $41.51 AUS compared to the current average retail price of $60 AUS; and the preferable price for a Nintendo Wii game is $55.39 AUS compared to the current average retail price of $90 AUS.

· 79.5% of respondents were more likely to buy a familiar sequel console game, than an entirely new game.

3.1.1 Importance of Attributes

· List of important attributes (in order):

1. Replay-ability

2. Gameplay mechanics

3. Storyline and characters

4. Music

5. Realism + Art style

6. Length of game

7. Challenging-ness

8. Graphics

9. Online Capability

3.2 Purchase decision and circumstances

· 51.3% of respondents buy console games just for themselves, while 29.49% buy console games as a gift to another person so they can play together

· Most respondents buy console games every 1 to 6 months

· Most respondents don’t buy console game at a particular time, but rather, all year round

3.3 Post- Purchase processes: Consumption and Post-Consumption Evaluations

· On average, one or two different people would use the bought console game, including the family

· 85.5% of respondents kept their console games after playing them

· Game mechanics and the length of the game are the most common disappointing aspects, on average

· Nearly all respondents would purchase from Nintendo again even if they weren’t satisfied with their product. Majority of respondents, however, wouldn’t buy a sequel if they were not satisfied with a game from the series.

4. How Nintendo uses the Consumer Decision Process Model

Nintendo already has a continuous consumer behaviour survey in place, which measures the gamer’s behaviour towards all the individual Nintendo items they purchase. They are able to achieve this by requesting the completion of a survey every time a consumer registers their product with Nintendo’s loyalty program.

Nintendo asks similar questions to my primary gamer consumer behaviour survey, including age, gender, consumption patterns, and external search sources.

4.1 Need recognition

As stated above, consumers need recognition is triggered by exposure to the new product due to it being a self-actualisation need, and not a necessity. Nintendo promotes their goods and services strongly via many means, but none as prominent as the annual Electronic Entertainment Expo (E3). Nintendo leaves their biggest marketing announcements (such as development of a new consoles, or big project games) to this event every year, which are then delivered by corporate figureheads (president of Nintendo, and president of Nintendo of America). Millions of people watch this event online or attend it in person, making it the biggest event in gaming annually.

4.2 Search

Due to gamers’ reliance on online external searches, Nintendo has targeted popular opinion leaders in the field (such as famous game bloggers or reviewers) and offers them pre-release trials of the games to review or blog about. Nintendo also gives free passes for conferences, such as E3, to unofficial gaming websites. Nintendo also has micro-sites for their most popular titles, such as Legend of Zelda and Mario that contains exclusive information about the games.

4.3 Purchase

Although console games are purchased all year around, Christmas time and the American summer are two of the busiest periods for the console game market. These periods are, of course, the gift-giving season and the vacation time for adolescents. Due to this, Nintendo releases its largest and most anticipated games either near Christmas, or May/June/July.

5. Considerations

5.1 Conclusion

The consumer decision making process of Nintendo’s gaming industry can be easily summarised:

· Largest segment of gamers are adolescent males

· Their need for a console game purchase is a self-actualisation leisure need, which is triggered by exposure

· Gamers’ primary motivation when choosing a game is to experience positive affect of task and goal orientated game play

· Consumers use the internet mostly for the external searches process

· Consumers buy console games, on average, four times a year

· 1-2 people are using the console games bought

· Consumers are mostly keeping their consoles and console games after consumption

5.2 Issues

A prominent issue arising from the cooperate-influenced gaming culture is the marginalisation and insensitivity towards females and female gamers. Although the face of gaming is male, 42% of gamers are actually female (Entertainment Software Association (esa) 2011). The reason for the issue potentially lies with game developers, as majority of game content contains more masculine than famine characters, and that the nature of games tends to appeal to the male skill set (Phillips and Co. 1995).

Although feminine gaming is a societal issue that may be influenced by the gaming industry, certain perceived risks have prevented gamers or potential consumers from purchasing consoles and console games.

5.2.1 Perceived risks

The gaming industry, as a whole, faces a few perceived risks that affect their consumers. First and foremost is perceived risk that gaming encourages laziness. Although there is limited research on the subject, there is a social belief that playing video games prevents gamers from exercising and tending to other responsibilities. This concern likely stems from the fact that for a person to play video games they must sacrifice their time. This leads to the neglect of other activities including exercise, socialising and household chores.

Less publicised, yet more established perceived risks are the heightened aggression and lower academic level of gamers- and in turn-playing video games. A study performed in 2003 by the Minnesota School of Professional Psychology found that video game- addicted adolescent were significantly more likely to report having been in a physical fight in the last year (Hauge and Gentile 2003). They also had a higher hostile attribute scores, as well as having more arguments with friends and teachers. The same study also found video game-addicted adolescents reported lower academic grade. A study by Brown University, Rhode Island, observed the same result, as well increased inattentiveness and ADHD levels. The study specifically states that “This investigation found that playing console and Internet video games for more than one hour a day has negative social and academic effects in adolescence” (Chan and Rabinowirz 2006).

6. Implications

6.1 For the Business

Some recommendations for Nintendo include:

· When developing games, place more emphasis on most important attributes (replay-ability, game mechanics, etc.) which contribute to the ‘Flow’ (Johnson and Wiles) of gameplay

· When developing games, improve and consider prevalent disappointing attributes, such as the length of gameplay

· Develop games and marketing strategies that are unisexed or appealing to females. Suggestions include not using sexist character designs, and contain famine elements.

· Battle perceived risks of aggression by developing initiatives in games or consoles that decrease hostility in gamers. (Note: Nintendo has battled the perceived risks of laziness and unintelligence by developing physical and mental fitness games such as Wii Fit, Brain Age, Big Brain Academy, and Sight Training)

· Lower prices of console games to a more consumer-appealing price

· Develop sequel to successful games as there is already an enthusiastic consumer-base willing to purchase

6.2 For Consumers

Some recommendation for consumers to help them make better purchasing decisions:

· Understand and analyse the need in purchasing a console game

· Understand the corporate influence in producing recognition signals

· Understand and recognise the gender- and possible racist -boundaries in the gaming culture

· Consider the perceived risks of gaming, as well as alternative Nintendo provides for them, before purchasing

-After purchasing a console game, be conscious of perceived risks and take measures to avoid them. This includes exercise regularly to avoid laziness, do homework to avoid low academia, and participate in calming exercises to avoid heightened aggression.

Bibliography

Chan, P. A. and T. Rabinowirz (2006). "A cross-sectional analysis of video games and attention deficit hyperactivity disorder symptoms in adolescents." Annals of General Psychiatry 5(16): 4-5.

Entertainment Software Association (esa) (2011). 2011 Essential Facts about the Computer and Video Game Industry, Entertainment Software Association (esa).

Hauge, M. R. and D. A. Gentile (2003). Video Game Addiction Among Adolescents: Associations with Acedemic Performance and Aggression. Society for Research in Child Development Conference. Tampa, Florida, Minnesota School on Professional Psychology, Argosy Universuty

Johnson, D. and J. Wiles (2001). Effective Affective User Interface Design in Games, School of Psychology and School of Computer Science and Electrical Engineering, University of Queensland, Australia.

Nintendo Co. (2011). "Nintendo of America's Corporate Mission and Philosophy." from http://www.nintendo.com/corp/mission.jsp.

Phillips, C. A. and a. Co. (1995). "Home video game playing in schoolchildren: a study of incidence and patterns of play." Journal of Adolescence 18: 687-691.

PriceGrabber.com (2007). Consumer Behavior Report~ December 2007: Video Gaming Trends.

Price: Nintendo 3DS price drop

The Nintendo 3DS had only been available for 4 months when Nintendo announced a major global price drop. After the period of the 3DS’s initial release, the sales of the hand-held console had significantly dropped. Nintendo could not have anticipated this, especially within less than 6 months of it being on the market.

Much like any newly released product, Nintendo adopted a price skimming strategy that focussed on profit maximization. This strategy is always smart; as loyal gamers will not hesitate paying whatever price as long they can get the product shortly upon its release. Shortly after, however, 3DS sales plummeted as gamers were either refusing to pay that amount for the item, or were totally unconvinced of Nintendo’s new device.

An executive decision resulted in a $100 price drop world-wide, being announced late July 2011. This early penetration pricing strategy was aiming to fulfil sales orientated objectives. This would also mean that the faithful Nintendo gamers, who paid full price months earlier, would be left in Nintendo’s corporate dust as the suckers who supported 3DS’s early sales upon release. However, Nintendo (who really values and requires these loyal consumers) launched its 3DS Ambassador Program which will reward the current 3DS users with 10 free NES Virtual Console games before they are released for sale to the public. Users will also be able to download 10 free Game Boy Advance Virtual Console games which have no current plans to be released for public sale. So that is 20 free downloadable games at a retail price of (approximately) $200! This would ensure a continued happy and intimate relationship with Nintendo fans while also expressing how much they really value them.

This announcement cause two kinds of movements: The first being of consumers who want these free games, and willingly pay full price for the 3DS; and the second being of money-tight consumers who are now jumping at the chance to get Nintendo’s cheaper hand-held. By dropping the price, Nintendo has also effectively created a relaunch for the 3DS. This fresh re-release and new price has already seen success in both North America and Japan with Japanese sales equalling that of the 3DS’s 2^nd week on the Japanese market, back in the beginning of March.

It is unsure how long this surge of sales will last, but for Nintendo, they are sales none-the-less, and at the same time, keeping all their 3DS customers (current or future) very happy.

Product: Transformers 3- Dark of the Moon

Although both Transformers, and Transformers: Revenge of the Fallen have the same appealing qualities, it was whilst watching the third Transformers’ film that I noticed how Paramount Pictures segmented this product to suit a masculine audience. Transformers: Dark of the Moon has three major features that are designed to suit their target audience:

Storyline: Although the film has a storyline, it is halted mid-way through the film only to be replaced with a good hour and a half of running and fighting sequences that would make a female lethargic while watching it. But what remains of a plotline is thick with military campaigns, characters, weaponry and patriotism. Although the armed forces are globally male-attracting, the movie specifically focuses on the US military and America- the major consumers and producers of these kinds of film.

Before being remade for an older audience, Transformers began as an 80’s children toy and TV series. The story focuses on the war between the good Autobots and the evil Decepticons. Unlike the Bay’s version, the transformers are not as violent and the situation never as dire. The franchise was very popular with boys, only to becoming a retro and a cult classic in the following decades. In the age of dark movie reboots, Paramount (in cooperation with Hasbro) bought the rights to recreate the childhood classic, into a mature action adventure in the same league as The Dark Knight and Sam Raimi’s Spiderman films.

Casting and crew: Michael Bay led the production team for the three films. Much like many of Bay’s previous projects, the film’s storyline comes second to the need for action sequences. Pearl Harbour, Armageddon and I Am Number Four sport Bay’s ability to compensate bad scripts with the perfect action adventure- explosions and impending doom included. And without attempting to stereotype the entire male population, this is exactly what turns men on.

Even the casting skews towards satisfying, or at least appealing, to men. For example, Meghan Fox’s character (and her replacement in the third film, who coincidently looks like Meghan with a blonde wig on), are extremely popular, smart, sexy and successful. Realistically, this kind of women would not date or even consider dating someone as ordinary as Shia LaBeouf’s character. But in the film they do, and that is what ordinary men would prefer to see and believe. And apart from a line of dialogue and being eye-candy, the female lead is largely irreverent to the plot.

Props: When it comes to transforming robots, producers cannot ignore pleasing and attracting boys with an interest in big toys. Among helicopters, spaceships and guns, the film deliberately draws attention to the very costly cars that are the Autobots. The Chevrolet Camaro, Pontiac Solstice, Hummer H2 and Saleen S281 Extreme are just some of the cars that would make a man’s mouth water when watching them tear up the roads (sealed or not) all across the globe at high speeds.

Promotion: The Legend of Zelda 25th Anniversary

Congratulations Shigeru Miyamoto, your famous franchise has lasted 25 years! But the real ones that are cheering are Zelda gamers. At E3 2011 Nintendo promised a Zelda extravaganza in celebration of The Legend of Zelda’s 25th birthday, strategically starting with Zelda: Ocarina of Time 3D in June, then a tour of The Legend of Zelda 25^th Anniversary Symphony Concert Orchestra in Fall, and as a grand finale, the year ends with the highly anticipated Skyward Sword at Christmas.

This is a large and clever promotion. Not only is Nintendo promoting ONE Zelda game, but the entire franchise on ALL the currently active consoles: from Links Awakening (unveiled on the 3DS eShop), to Ocarina of Time (Remastered on the 3DS), to Four Swords (downloadable on the DSi) to Skyward Sword (released latter 2011 on the Wii). The loyal consumers that ritually play the Zelda games will be treated to exclusive performance of music from the Legend of Zelda. As much as this is an once-in-a-lifetime experience, it is also a sure way for Nintendo to 1.Promote and excites the audience for the much-anticipated Skyward Sword, and 2. Make money. This event itself was promoted at E3 2011 with a powerful speech by Miyamoto about the importance of the music in the Zelda games, as well as a five minute performance by a full orchestra at the opening at Nintendo’s press conference.

Although these are the three main events, Miyamoto concluded his E3 announcements by claiming that more Zelda surprises are planned for 2011. If Mario’s 25^th Anniversary is anything to go by, we may be able to expect a special Legend of Zelda 25^th Anniversary mini-site, contests, plush toys (although unlikely), and console skins. As annoying as it is, the secrecy is alluring, as it keeps the audience stimulated and hopeful for something more.