Sony AIBO – The

World’s First
Entertainment Robot
Presented By – Group 7
 Introduction
• Sony AIBO was introduced as a pet that would “do” nothing, but entertain
people with the use of artificial intelligence
• This idea was introduced by Toshitada Doi, Sony’s leading computer engineer
• In 1999, the first generation AIBO was launched as a four-legged pet, which
was able to walk well with the ability to “pick itself up” if it fell over, had
“eyes” which were 180,000- pixel colour CCD cameras with sensors
• It also showed “emotion” through a combination of musical tones, eye colour
and body language
• Like any other human or animal, AIBO went through the developmental stages
of an infant, child, teen and adult
• AIBO drove major sales in the Japanese market, after which in November 2000,
the second generation AIBO was launched with more advanced features ,
followed by which in summer of 2001 Sony introduced new software
applications to the second gen AIBO

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 Situational Analysis - SWOT
• Strong brand recognition
Strengths • First mover advantage
• Wide geographic presence

• Not part of Sony’s core competencies

Weakness
• Loyalty among suppliers is low

• Customer preferences are fast changing

• Accelerated technological innovations
Opportunity
and advances

• Honda using the same platform

Threats

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SONY AIBO: THE VALUE PROPOSITION
PRODUCT

• Hassle free pet

Benefits • True companion
• Entertainment

• Mimics the action of a dog

• Can be trained
Features • Has its own personality
• Communication

• Companion
• Puppy love
Experience • Fun of living creature
• Friend
Sony AIBO: The value proposition
CONSUMER

• Hassle free pet

WANTS • Pet with desired personality
• Companion

• Companionship
NEEDS • Affection

• Needs to replace after a particular time

FEARS •
•
•
Frequent charges
Need for training
High investment
Stealth Marketing -
• Millions of Dollars were spent on developing the first Household Robot, and Sony was
the First Mover in the Industry. The company was aware that marketing an unreliable,
human-like robot which could not perform basic functions could backfire.

• Understanding of the Needs of Japanese Consumers, who lived alone in small

apartments and needed an affectionate companion.

• Consumer Demographics – Working Class, Old People, thus enhancing the need of a
“hassle free pet”

• SONY AIBO had no direct competitor, the company aimed to carve a niche for the
product in the Industry.

Ad - https://www.youtube.com/watch?v=sJciRIZQTg4

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 The TWO markets
JAPAN AMERICA
POSITIONING “COMPANION” for life “COMPANION” for life

PERCEPTION In Japanese Culture, Robots were In the American culture, robots have
considered to be “Heroes” always been perceived as “enemies”,
fighting against humans
VALUE A robotic pet that would interact with But what does it “DO” ?
PROPOSITION people, and would behave like a
“mature” pet after getting love and
attention from its owner
CONSUMER Need to be loved, cared for, affection, Functionally driven consumers, so they
NEEDS companion since pets weren’t allowed wanted robots that would perform
to be kept at home “serious” household chores
SALES Major sales was driven from the Sales was driven by only the young
Japanese market American generation
GAP No gap Consumers were averse to Robotic
technology which did not have a
“serious” function

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COMPETITION LANDSCAPE
There were no “direct” competitors of Sony AIBO as such, however it had
to face some struggles in the American market due to some local players
and other brands which were emphasising on the necessity of
functionalities in a high priced robot

 By 2001, low end knock offs such as the cheap toy pets like robotic
puppy, Poo-chi etc , which were priced below $50, had become
ubiquitous in the American toy shops
 At the other end of the competition spectrum, a number of other
technology driven companies like Honda, Matsushita, Hitachi and
Toyota were working on personal robots that could help with the
“serious” household chores, which were easier for mainstream
Americans to understand, however for them the focus was completely
on utility.

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How competition affected Sony's marketing
strategy?

• Consumer profile
• Distribution channel – In order to have a better
distribution and enhance reach the second
generation Sony AIBO was made available through
the retail outlets, including Sony Style stores,
selected Neiman Marcus stores and Sharper Image
retail outlets
• Pricing strategy- Second generation Sony AIBO was
priced at a lower price, with the options of
upgradation
• Promotional strategy- WOM, AIBO comics, AIBO
video games, AIBO societies etc
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ANSOFF MATRIX

Market Development
Strategy
 Use of open R
technology
 Leverage AIBO chat Place your screenshot here

rooms
Increase interaction and
participation

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Five factors

Observability Trialability

Relative
Complexity
Advantage

Compatibility
Marketing Strategy - US
• The American consumers failed to understand AIBO – Customer Confusion
• AIBO Owners in US were a tightly-knit community
• Low-priced knock offs added to the confusion
• Therefore, an Integrated Marketing Strategy should be adopted

AIBO Tech AIBO

Community Journals Merchandise

AIBO Word of
Email
Comics Mouth

YouTube
Commercials
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 The AIDA Model
Through WOM, Tech
Confusion in the Blogs and Journals –
American Market The Busy, Lonely
American Consumer

Awareness Interest Desire Action

Product’s Positioning
and its alignment with
the American
Consumer’s Need
PROBLEM STATEMENT

◎ Failure to position the product to appeal to

two different consumer ( Japan and America)
◎ Unable to categorise the product
◎ The product remains unprofitable for Sony at
this stage
◎ Possible causes:
1. High price tag
2. American consumer see little value in a
robotic pet that performs no functional task
Evaluation: Alternative 1
Don’t Enter American Market

Criterion Decision Rationale

Sony’s Overall Strategy & Wanted to put entertainment

competencies ROBOTs worldwide

Potential of the market

There is a huge market base
(Buyer’s prospective)

Competition in the market NOT Applicable

Without tapping the market,

Profitability we lose the potential market
Short Term & Long Term share and increase in bottom
line
Evaluation: Alternative 2
Enter As functional ROBOT

Criterion Decision Rationale

Sony’s Overall Strategy & Wanted AIBO to be a part of

competencies the family as a companion/ pet

Main stream America wanted

Potential of the market
robots to assist in serious
(Buyer’s prospective)
household tasks

Already established big Names

Competition in the market
in the market

Short Term: Good, as the

product matches what
consumers want
Profitability
Long Term: AIBO not designed
Short Term & Long Term
to be functional product; to
add new functionality, Huge
cost & time requirement
Evaluation: Alternative 3
Enter As an Entertainment ROBOT
or Companion with enhanced functionality

Criterion Decision Rationale

Sony’s Overall Strategy & “Want to see AIBO playing with the
competencies kids or family in every living room”

Effort required to change consumer

Potential of the market perception is high; however potential
(Buyer’s prospective) for ROBOT market is high (Unique
Product)

Unique high end product; but

Competition in the market
competition from Cheap knock-offs

Short Term: Medium, as we have to

change consumer perception and it
Profitability requires time & marketing effort
Short Term & Long Term Long Term: Good, as we have the
required competencies & are the
pioneer of this market
RECOMMENDATION

Niche Marketing instead of Mass Advertising

Position for people seeking an entertainment companion

as well as interested in Information Technology and
robotics

Leverage the economic curve so as to bring the price

affordable to the customer

Know the expectations of US consumers from AIBO

Should SONY reduce the Price?
 The price for the second generation AIBO had already been dropped to $1500
from $2500 of the First Gen.
 The Low-Priced Knock-offs were not direct competitors
 The company was barely breaking even at $1500 price point
 The company aimed to add more features in the future generations, which
could mean an increase in costs.
 Hence, the price should not be lowered further.

Comparative Review - https://www.youtube.com/watch?v=tLjtOMBWvTo

Thanks!
Any questions?

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