Sony Adapts to Changing Market

Companies that thrive do so by adapting to a changing market. Sony is revamping its manufacturing and marketing plans in an attempt to become both more efficient and more responsive to consumer needs.

On June 7, Sony Corporation announced that it would begin operating its Japanese manufacturing plants 365 days a year, using the same number of assembly workers presently employed. The new plan should reduce parts inventory and shorten time to market, company executives believe. Plants will run year-round, with workers functioning as teams who show up together for each shift. Full-time production, it is hoped, will smooth out spikes and dips in inventories of audio and video equipment, the bulk of which is sold by dealers over the weekends.

Workers will still have the same number of days off per year, and the year-round schedule should not affect their vacations, according to the announcement. Labor unions have already been informed of the changes, to take place later this year.

The first Sony factory to implement the new system will be a plant in Aichi Prefecture that makes camcorders, digital cameras, and personal computers. If the plan succeeds at the Aichi plant, Sony will expand it to other assembly facilities beginning later this year.

Sony also plans to change its marketing tactics. At Sony Electronics' annual press conference held June 6 in New York City, president Fujio Nishida said that Sony will seek to differentiate its marketing of various products to its customers according to demographics. While not a new concept at most American companies, Nishida said, the concept is a novel one for Sony. He defined his company's target groups as "Gen Y," or 18- to 24-year olds; "Gen X," or 24- to 34-year olds; "baby boomers," who are between 35 and 49; and "matures," the over-49 crowd that Sony assumes are "empty nesters" whose children have already left home. (News reports on Nishida's comments didn't specify how Sony arrived at these categories, but someone should inform the company's marketing department that in the United States, especially in California, there is a significant segment of the over-49 age group with young children, many of them second families.)

"Differentiation is our mission," Nishida stated. "We must see the customer first, sell as much product to those specific consumers as possible through the right retail channels." Sony's greatest growth in 2001 was in the Gen Y sector, where sales rose 145%. Among the targeted product lines the company plans to introduce this year are a Sony Sports portable for on-the-go CD/radio, aimed at the 18–24 crowd, a revived MiniDisc system for "ripping CDs and downloading music," and the "Liv" series of home-audio products targeted at women and to be sold through the Target retail chain.

Sony is also trying to smooth out supply lines so that retailers never run short of product. TV production in Mexico means the company can respond quickly to changes in the American market, Nishida said, and Sony audio, video, camera, and computer products are now shipped weekly from factories in Japan and China. Despite the economic downturn of early 2001 and the turmoil late in the year, Sony's American sales were quite good, Nishida noted, "slightly higher than the prior year."