Introduction
The successful marketing and revenue generation of products is governed by a host of tangible and intangible factors. As marketing analytics research continues to develop theories and models for uncovering these important components of the product sales cycle, certain components differentiate themselves through importance and impact. Brand equity is one such component and can be described as “the added value endowed on products and services…reflected in the way consumers think, feel and act with respect to the brand” (Kotler & Keller, 2012, p. 243). In an effort to better understand brand equity, this paper analyzes the brand equity properties of the three primary gaming consoles in the United States.
The analysis of the gaming console platforms from Microsoft (Xbox), Sony (PlayStation) and Nintendo (Wii) is specifically important and revealing because of several factors. First, the initiation of this paper coincides with the unveiling and soon to be released newest additions to the Microsoft and Sony fleet of gaming consoles, specifically the PlayStation 4 and Xbox One. In addition, the three platforms are widely used devices with significant brand loyalty, salience, feelings and resonance among their vast user bases. Finally, the items have similar but not identical price points coupled with similar but not identical features. This combination of factors makes gaming platforms an ideal brand equity research topic given the large population size that can be tapped for research, the similar scope but vastly different approaches to playability and the well timed release of the Nintendo Wii U and the announcement of the Xbox One and PlayStation 4.
Given the serendipitous nature of the gaming platform marketing situation, this paper specifically analyzes the brand equity of these three platforms combined with an analysis of the existing marketing research and demographics of survey respondents to more fully develop an understanding of these three brands. A cursory understanding of these brands yields some basic information about the brands; fierce loyalty can exist amongst console users, specific features are expected to be slight differentiators between brands and the newest platform addition to each brand should have an effect on brand equity. This paper aims to further develop brand equity understanding as explained by Orme through brand price sensitivity, brand preference (2010) and probability of choice as well as demographic impact and segmentation. This is further enhanced with the inclusion of the newest platform choices amongst the brand options.
Literature Review
Brand equity can be extremely powerful and when developed in the proper manner it can yield significant product acceptance and exposure ultimately leading to further sales and leadership within an industry. Researching brand equity requires an analysis of brand equity methodology as well as specific gaming console brand understanding through a previous review of literature. Young and Rubicam’s development of their BrandAsset Valuator measures brand equity across four primary components, energized differentiation, relevance, esteem and knowledge yielding a grid product for brand strength and stature (Kotler & Keller, 2012). Both Microsoft, Xbox (separate brands for this analysis) and Nintendo Wii score extremely well and occupy “leadership” positions for brand equity.
Harris Interactive, a brand and market research company, provides a yearly poll, the EquiTrend, for brand and has a specific category for Gaming Consoles (Harris Interactive, 2013). Their 2013 analysis finds the Microsoft Xbox as the leader amongst console brands with the Nintendo Wii placing second and the PlayStation 3 placing out of the top 3 (Harris Interactive, 2013). With the PlayStation PSP placing ahead of the PlayStation, this poll would seem to indicate that specific platforms can be substantial brands with strong equity to themselves outside of the overarching brand.
Branding research and execution company, Stealing Share echoes the idea that brand equity can be differentiated between primary brand and different platform brands. Their analysis highlights Nintendo’s successful attempt to invigorate waning brand equity with the departure from traditional game console design and acquiring of new demographics (Stealing Share, 2010). Their analysis goes further though in detailing that shifts amongst primary brand and secondary brand the difficulties faced by gaming consoles. This problem highlights brand equity as a necessity amongst consoles due to the proliferation of titles across many platforms and the losing proposition of “strategic pricing, speed to market and a wing and a prayer” (Stealing Share, 2010).
Brand equity importance is clearly a key factor for gaming consoles as they strive to compete for market share. Brand equity across titles can have an impact on the console brand equity and is thought to also play a role in the purchase decisions of lower less informed consumers and act as a proxy for quality valuation when traditional quality factor data is not available (Storgards, Tuunainen, & Oorni, 2009). However, the brand equity research in this area seems to suggest that this may not be the case. Storgards, Tuunainen and Oorni found that when it comes to game brand equity, branded versus no branded was not statistically significant across any of the tested variables (2009). This would seem to suggest that correlation between game brand equity and console brand equity may not be as strong as popular opinion would allow.
This development leads back to the overall nature of equity amongst console, publisher and game. Lee Langford postulates that while console and game equity can be strong, publisher equity is poor is in most situations (Langford, 2013). Langford, Harris Interactive’s research director, goes on to discuss firm equity amongst non-gamers and gamers alike and the results indicate that publisher equity is poor amongst both segments with further analysis indicating the that not only does brand familiarity drop off with gamers and non-gamers but when gamers are questioned on emotional connection and momentum of the publisher’s brand there is fall off as well (Langford, 2013).
The primary body of literature as presented indicates that publisher brand awareness is not strong and that game brand equity can be strong but given the cross population of games throughout the platforms game equity correlates poorly with console equity. The days of Mario on Nintendo and Sonic on Sega are over and with only a few exceptions specific game playability can usually be found on any of the major consoles. Current research indicates that game console brand equity is a strong differentiator when assessing sales of consoles and other console specific factors. Combined with the initial inspection of game consoles this research project is an important analysis of game console brand equity especially within the context of current game console’s new product offerings.
Methods
The research was conducted through the surveying of individuals using the choice based conjoint analysis method and the research of relevant literature pertaining to the gaming industry. The data was thoroughly analyzed using the Pearson correlation analysis to determine which variables had the strongest correlation to the purchase of a gaming console. The logistic regression model allowed us to understand the strength of the relationship of which gaming console was purchased (yes or no for gaming console purchase) and the nature of the independent variables (Microsoft Xbox, Nintendo Wii, or Sony PlayStation). This research used marginal willingness to pay (MWTP) to determine how much consumers are willing to pay as the number of gaming consoles consumed increases while the goodness of fit model was used to determine the variability of the data between the dependent variable and independent variable. K-means clustering was also used to segment the gaming console consumers to develop information used for targeted marketing and the linear regression model was used to determine which demographic characteristics (independent variables) have the strongest relationship to purchasing a gaming console (dependent variable).
The logistic regression results indicates that all the gaming consoles have a strong probability of purchase with a probability level below the 0.05 significance level. The Sony PlayStation 4 and the Microsoft Xbox One have the strongest significance with the Microsoft Xbox coming next and the Nintendo Wii is last. What is interesting in these results is the newest gaming consoles, the Sony PlayStation 4 and the Microsoft Xbox One are more likely to be purchased than the previous models. The MWTP results support the logistic model results as it appears consumers are most likely to pay more for the Microsoft Xbox One and the Sony PlayStation 4 than the Nintendo Wii and the Microsoft Xbox. The MWTP for the Sony PlayStation 4 is $405.89 with a range of $364.40 to $457.81. The MWTP for the Microsoft Xbox One is $254.09 with a range of $217.51 to $293.08 verse versus its predecessor Microsoft Xbox’s MWTP is $101.38 with a range of $47.43 to $150.05. The Nintendo Wii MWTP was drastically below its competitors with consumers willing to pay near to nothing for this gaming console. The goodness-of-fit test using the R-squared value is 0.1945 which indicates a little over 19% of model variability is explained by the model developed. As the model was aimed specifically at price and brand this could be interpreted as almost 20% of variability is explained specifically by brand and price and this could be very significant however further analysis should be performed to determine segmentation information including which gaming consoles are more popular between males and females as well as which gaming consoles are most popular between age groups.
Results
The logistic regression model used to determine gaming console purchases based on the demographic data did not provide enough information to come to a confident conclusion. However, the linear regression model did provide more information about the demographic characteristics of the gaming console consumers. Age, households with children, and the geographic location has the strongest significance when purchasing a gaming console. Although gender did not appear significant in this particular analysis study, the sample of respondents was significantly skewed towards male verse versus female and results could change as the sample size increases. It is important to note that of the female respondents, 80% are gaming console owners compared to 65% of males.
Age had the strongest significance within demographic characteristics with the gamers ranging from 17 years old to 49 years old. The average age of a gamer is 30 years of age (G, 2012)*****, but based on our survey results, most gamers are over the age of 30. This data helps to determine which age segments to target for marketing purposes based on which gaming console is most popular among these age groups.
Finally, our analysis suggests that the Microsoft Xbox and the Sony PlayStation have the strongest brand equity regardless of the gaming console version. The Nintendo Wii on the other hand appears to have lost traction in the gaming console sector and Nintendo will need to make some significant changes to improve their performance.
The logistic regression model gives a strong indication that as the newer gaming consoles increase in sales their predecessor console will decrease in sales and this is supported by the marginal willingness to pay model.
The linear regression model results provide better insight than the logistic model results in reference to the demographics of the consumers purchasing gaming consoles. The LRM provided insight that female gamers are more likely to actually purchase the gaming console when compared to their male counterparts. In addition, even though the average age of gamers is 30, the LRM results states consumers over 30 are increasing their purchases of gaming consoles. We cannot ignore that households with children and certain geographic locations are bigger gaming console consumers. This information is valuable in market segmentation that can be used in targeted marketing campaigns.
Conclusion
A cursory analysis of the current literature and popular opinion was able to indicate that brand equity, though important, was not a differentiator for publishers and further that brand equity for games is very strong but this effect does not carry over into gaming consoles because of the cross console playability of most games. Our analysis indicates that brand equity for gaming consoles themselves is indeed strong and is a significant factor within the variability of models developed during the analysis. This study supports that the gaming industry will continue to grow and remain relevant in the market. The importance of these results shows that Microsoft Xbox and Sony PlayStation consumers will remain loyal to these brands and will tolerate a certain amount of price inflation. In addition, the newer models of these gaming consoles will decrease the price tolerance of the older models, but the brand equity appears to remain strong amongst consumers.
Furthermore, the understanding of demographic information related to gaming consoles has increased. It is important for marketing managers to understand that the demographics of gamers is changing and this will require a strategic shift in targeted marketing amongst the various demographic segments. As this study has revealed, gender appears to be reversing from accepted buying trends and female gamers are now more likely to purchase a gaming console. In addition the age of the gamer is increasing and the previous age segment of gamers is growing older meaning that the average age of a gamer has increased to above 30 (G, 2012). The Myth of a Gamer’s Age. Retrieved from http://www.geekquality.com/average-gamer-myth). This has large ramifications on the gaming console industry as their demographic segments are become becoming more varied but their primary age segment is getting older which would typically mean that the buying power of their primary segment is increasing as well. Although more research and analysis would need to be performed to develop a further understanding, this initial analysis yields important brand equity and demographic components providing initial insight into game console product and brand as well as market segmentation methodology for game console consumers.
Finally, this marketing study demonstrates an important analytical addition to the current research field for video games. While several companies and persons have analyzed game brand equity and its relationship to consoles and publisher as well as console popularity amongst users, this study adds a major component that has thus far been glaringly missing from the available body of research. Gaming console manufacturers have likely stored away similar brand equity analytic reports but this initial conjoint analysis against the top three brands provides a basic methodology for brand comparison. The results are significant in the highlighting of brand power for Xbox and PlayStation but the methodology is key in taking this study to the next step and developing the study across a stronger sample size to ensure similar results. The conjoint study can be further developed as the new console attributes are released and a traditional conjoint study combined with the brand equity conjoint study would provide increased detail on the nature of the existing brand and the leverage various console attributes have in contrast to brand and price.