Back in the Saddle

Facing stiffer competition from upstarts that have stolen its thunder in the consumer electronics business and a brand that is declining in monetary value, Sony Corp. has begun a makeover of its SonyStyle.com web site as part of a corporatewide effort to reenergize a sagging brand.

Key to the strategy is to more closely integrate SonyStyle.com with the company`s other business units, in particular Sony Pictures Entertainment, Sony Computer Entertainment of America, which produces PlayStation, and Sony DADC, which markets CDs and DVDs. The aim is to create a branding tool that fully leverages the resources of the company to more effectively and consistently showcase Sony products and ultimately make Sony the consumer electronics brand of choice.

The key to Sony`s approach, says Jack Halperin, senior vice president, Consumer Direct Business for Sony Electronics Inc., which oversees SonyStyle.com, is a return to simpler, more basic branding. If successful, the strategy will bolster direct sales by creating a richer, more dynamic online sales environment that helps consumers answer the age old question "Why should I make this purchase?" It will also enable SonyStyle.com and its sister sites to deliver the after-purchase support that engenders deeper brand loyalty and fosters repeat sales across Sony`s entire product line.

From interest to intent

"Our intent is to use the infrastructure and knowledge of SonyStyle.com to create an integrated strategy that takes business-to-consumer sales to the next level," Halperin says. "The focus is on moving consumers from interest in Sony products to intent to buy."

On paper, the strategy sounds simple. In reality it is anything but, concedes Halperin. Achieving the company`s goal means knocking down the silos within Sony`s many business units that create operational redundancies, inflate costs, and in some cases, hinder business development opportunities by making it difficult to share resources between divisions or with retail partners.

"It`s a massive proposition," acknowledges Halperin, who guided the early evolution of SonyStyle.com as senior general manager of business development for Sony Electronics eSolutions Co. from 2001-2003, before moving on to spearhead Sony`s CRM platform initiatives. "But there is a lot to be gained not only on the direct sales side, but in other areas of operation throughout the company."

Operating efficiencies are a ­measure in the monetary value of a brand, as well as an essential ­element in competing on a global basis. Companies that waste money to organizational and manufacturing inefficiencies lose market share to more efficient, innovative competitors.

That has certainly been the case for Sony in the exploding market for MP3 players. Sony, which once owned the market for portable music players with its Walkman, has lost its leadership in that market to Apple Computer Inc.`s hugely popular and iconic iPod. In recent years, Apple has revolutionized the downloading and organization of digital music on MP3 players, and capitalized on promotional tie-ins, such as its tie-in with the band U2 in 2004.

"A few years ago, Apple was just another company manufacturing an MP3 player, today it dominates the electronic digital music space," says Michael Gartenberg, vice president of research for Jupiter Research. "Sony is facing competitive challenges it has never faced."

A big decline

Other competitors, such as Samsung, which has eliminated sub brands in favor of positioning its flagship brand as a premium consumer electronics brand, have gained ground with the introduction of mobile phones and digital televisions that showcase technical innovations, once a shining trait of Sony that has dimmed in recent years. Samsung`s gamble has paid off big. The ­company`s brand is valued at $14.9 billion, up 19% from the previous year, and ranks 20th on Interbrand Corp.`s list of the Top 100 global brands. Sony`s brand, which ranks 28th, dropped 16% in value in 2005 to $10.7 billion, the largest decline for any brand in Interbrand`s Top 100.

"Sony hasn`t had a lot of breakthrough products lately and it can be argued that individual divisions have underperformed," says Jim Okamura, senior partner with retail ­consultants J.C. Williams Group. "Their ­strategy of more tightly integrating ­e-commerce into the main business lines can be seen as getting back to basics and having SonyStyle.com do what it did so well years ago."

An online library

Innovation was a hallmark of SonyStyle.com during Halperin`s first turn at the helm. Among the services introduced to consumers by SonyStyle.com was the Home Entertainment Configurator, which presented customers with a selection of Sony televisions based on the size of the room in which it would be placed, accompanied by a surround-sound system based on the customer`s stated preferences.

Although the packages offered were linked to available inventory, customers desiring alternative configurations not immediately available through SonyStyle.com could access a dealer locator to check availability on other Sony surround-sound components. The feature, which was dropped long before Halperin`s return to SonyStyle.com in May, was considered a potent cross-sell and upsell tool, according to Halperin, who adds SonyStyle.com may resurrect an enhanced version of the Home Entertainment Configurator.

In a nod to such innovations as the Home Entertainment Configurator, SonyStyle.com has recently begun launching information tools to position the site as a library where consumers can learn how to maximize usage of Sony products, such as the company`s audio and visual hardware and software. The move was made in deference to the evolution of consumers into multi-channel shoppers who view the web as one of many touch points.

The approach is also recognition by Sony that the web is a crucial component in delivering content to consumers--so crucial, in fact, that the library probably wouldn`t exist without the web. "The web provides access to a user community into which ideas about how to use a product can be pushed which allows Sony to then create an outbound marketing loop that includes e-mail follow-up to sales," says Kent Allen, principal of The Research Trust, a San Francisco-based e-commerce consulting firm. "By going beyond the basic features and functionality of the web, Sony can create a never-ending learning process."

Influencing the influencers

One such information tool is Sony 101, a series of online classes in which consumers can learn, among other things, how to create a digital library of music, video, and other entertainment media on a home computer, how to improve their digital photography skills, or learn about the technology behind 3LCD projection for high-definition televisions, and the benefits of Sony`s multiple television formats.

As buying habits change, ­consumers are turning to new sources of product information, such as their friends, and not just to learn about which brand is best. "Education takes Sony into an interesting space, because it is largely geared to tech heads, and while this segment represents a sliver of the consumer population, they are still influencers," explains Jeff Swystun, global director for Interbrand. "Sony knows it needs to improve its communications and that it can`t necessarily communicate with everyone, so segmenting its customer communications to target influencers is a smart move."

Halperin envisions SonyStyle.com`s information solutions as a way to move customers of one Sony product, such as hardware, into related products, such as its Media Editor software application, and into content, such as DVDs and CDs. "By providing tips and tricks on how to use Sony products, we can give customers more reason to come back and move sales into other divisions," explains Halperin, who notes that buyers of consumer electronics typically renew their purchase every three to four years.

A weaving

Cross-selling and up ­selling are just one component of SonyStyle.com`s information strategy. The division plans to syndicate the look and feel of its web environment to retailers to create consistency in how Sony products and information about those products are presented to consumers visiting a retail partner`s site. Halperin says SonyStyle.com has been approached by consumer ­electronics retailer Crutchfield to integrate the look and feel of SonyStyle.com`s pages detailing Sony`s line of XBR high-definition televisions on the Crutchfield web site.

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The idea is to present these Sony products in a manner consistent with Sony`s marketing strategy, but without making the ­consumer feel as though he has been transported from Crutchfield`s retail environment when clicking on Sony product descriptions. "It`s a way to create a sub-brand showcase for us," adds Halperin.

Sharing resources externally with retail partners is expected to help Sony ease competitive concerns retailers may have about its direct sales ambitions, a concern which has always been a balancing act for Sony. "By working with its retail partners, Sony can highlight the brand and help grease the online sales funnel," Allen says. "This is not ­necessarily a huge leap, but a way to weave together the different threads of the customer service fabric."

The technology behind these efforts will be developed jointly by Sony business units and even channel partners, rather than SonyStyle.com, to create greater operating efficiencies for all parties and maintain a consistent presentation for Sony products and customer service.

Inconsistency in brand ­presentation on the web has been a problem for Sony in recent years. Consumers visiting Sony web sites often entered different environments that were inconsistent with the ­overarching presentation of the brand by the ­parent company. Part of the ­problem, according to Interbrand`s Swystun, was that Sony`s business units took on a profit-and-loss ­mentality that created a fragmented presentation of the brand, ­especially on the web. Ultimately, that approach led to operating inefficiencies that began to devalue the brand.

"It was a less consumer friendly focus," says Swystun. "Consumers don`t care about internal profit and loss issues, they want brands that have an intuitive understanding about what they want in everyday use of a product."

To correct the problem, Halperin is having web technicians from different business units work side-by-side in creating web content for each division and links that move consumers seamlessly between Sony`s different web sites without having the customer feel as though he is entering a new environment, even when contacting customer service.

Aligning divisions

"The goal is to align the divisions so they are effective cogs regardless of the value proposition offered, whether it be pre-purchase ­influence or post-sale support, so we can create comprehensive, end-to-end customer solutions," says Halperin.

By syncing the resources of each division, Halperin expects Sony Corp. will more readily identify business development ­opportunities and fully understand the cost to provide customer support for those initiatives. "It`s a more comprehensive view," he adds.

Heading into the holiday selling season, SonyStyle.com will for the first time offer gift cards that can be purchased and used interchangeably at SonyStyle.com and Sony retailers. A new customer loyalty program that rewards consumers packing the company`s cobranded credit card in their wallets with bonus points on purchases made at SonyStyle.com is also on tap.

Further out, SonyStyle.com plans to offer refurbished product, a ­process that is more efficient on the web than in any other format because it consolidates demand in one ­channel. Halperin estimates the tactic will reduce the cost of remarketing those SKUs by 20% to 25%. "Every manufacturer has to deal with returned items and offering them direct rather than through the retail channel is more efficient, although we plan to limit our emphasis on these sales so as not to undermine sales of new product," says Halperin.

Near-term, the primary ­challenge facing Halperin is becoming an ­advocate within the ­corporation of what consumers want from Sony products and transforming SonyStyle.com into a destination site that offers consumers a dynamic sales and communications proposition.

A tall order

"Sony is certainly capable of having its brand bounce back, but it needs to improve its communications with consumers, because people expect more out of Sony due to the company`s heritage as an innovator, a first-to-market company and a purveyor of quality," says Swystun.

That`s a tall order, but industry experts agree that as an e-commerce veteran with a proven track record for innovative leadership, Halperin possesses the expertise and understanding about the changing dynamics of the direct sales channel to reinvigorate SonyStyle.com, as well as the company`s overall web strategy, and ultimately pump up the value of the Sony brand.

Still, Halperin`s success hinges not so much on his ability as a consumer marketing expert, but on his ability as an internal salesman. If he can persuade Sony`s upper management to buy into his vision of what the company`s direct sales channel ought to be, the Sony brand stands a good chance of once again becoming the brand of choice in consumer electronics, analysts say. If not, they add, expect the Sony brand to continue its slide and SonyStyle.com to become just another web site.

Peter Lucas is a Highland Park, Ill.-based freelance business writer.

The Halperin Resume

May 2005-present: Senior vice president, Consumer Direct Business Sony Electronics Inc.

2003-May 2005: Headed Sony`s CRM Business platform and Cierge personal shopping program.

2001-2003: Senior general manager of Business Development for Sony Electronics eSolutions Company.