SEL Consumer Research

1. SEL Consumer Research Chris Gaebler October 7, 2002

2. SEA/SEL President Knowledge Management DINKs & Y.P/ SoHo Affluent/CE Alphas Gen Y/ Families StudiOne CE Betas Zoomers Media Cluster Marketing Planner Cluster Marketing Planner Cluster Marketing Planner Cluster Marketing Planner Cluster Marketing Planner Promo, Merch, & Internet Promo, Merch, & Internet Promo, Merch, & Internet Promo, Merch, & Internet Promo, Merch, & Internet Consumer Business Council Chair Product Management Cons. Segment Mktg CSMO Channel Asset Mng Sales President VNPC SVP VNPC SVP HEPD SVP PMPD SVP DIPD SVP ITPD SVP Affluent/ CE Alphas CE Betas Zoomers Family Gen Y DINKS/Y.P B2B/SoHo Demand Creation Management Strategic Planning E & W Sales Promotion Management Beta Champion & 9 Promos Channel Organization SCM Product Planning & SCM Product Planning & SCM Product Planning & SCM Product Planning & SCM Product Planning & SCM CRM Operations

3. Marketing Strategy & Intelligence Group Members • Chris Gaebler (Director) • Cary Meyers (Senior Manager) • Custom Consumer Research • Kevin Murakami (Senior Manager) • Segment & Market Intelligence Analysis • New product development for intelligence needs • Miguel Lazatin (Manager) • Segment Intelligence Analysis • E.g. IMR, NPD, CSMD Monthly Reports, etc. • Business Intelligence Dashboard • Kwon Lee (Supervisor) • data management • Neha Patel (Supervisor) • Research analyst

4. SEA FY02 CE Diagram - Sales Turnaround (FY01: Restructuring FY02: Sales Growth Strategy) - Suitable Profits Even With Zero Sales Growth Develop New Business Marketing Innovation (Diamond Plan) Business Selection & Focus CTQ 1 Customer SONY Executive Mgmt Customers Review / Eliminate Loss Businesses Enhance customer Focus (CRM) On-line Service Business Expand e-Service Business V O C Demand Creation Non-Cons AVIT Become Profitable Develop New Businesses Deliver valued products & services in a way that satisfies customers U.S. Initiated New Business Expand e-Commerce Business Segment Marketing Support Symphony Project Incubate Value-Added Businesses Strategic MDF Inventory Reduction “Being Sony”Campaign SGA Reduction Optimize Common Functions VOC Integration SOAR Project Measurement Metrics (Scorecard / KPI) Service Transformation Global Supply Chain Management Logistics Innovation Rationalization of Existing Assets SSS One Day Close Leadership Competencies Strengthen Infrastructure / e-tization Continuous ROI Evaluation Improve Asset Utilization Customer-Focused Creative, Entrepreneurial Culture Operational Excellence CTQ 2 CTQ 3 *Inventory D/S: FY’01 3 mos. COGS Average FY’02 1 mo. COGS ** After MDF Reclass

5. Business Planning - CE Diagram Insights & Metrics / Segment Growth / Optimized Investments Customer 3-D Business Analysis and Strategic Development Marketing Metrics (Consumer Segment) Marketing Mix Optimization And Marketing Planning • Segment Teams • Product Mgmt • CRM • Sales Teams • Corporate • Planning • CE Industry • Manage and report on Purchase Process Study • Quarterly life-stage segment Sales (Share) Reports • 3D Marketing Analysis: product, channel, consumer • Improve consumer purchase intent data from annual to quarterly • Control Market Testing: Ad Spending • Define process for understanding impact of macro-economic factors on SEL PresentFY2001 • Develop a marketing mix model and process • Campaign effectiveness FY2002 • Distributed Content effectiveness • Marketing Programs Not Measured • SEL/CEG Research Budget uncoordinated • Quality of POS data is limited and segment data is unavailable • Provide structure for segment forecasting model and process • Marketing Programs Measured • SEL/CEG Research Budget coordinated • Quality of POS data is high and segment data is available • Issue 3-D CSMD Mgmt Reports • SOHO, Alpha metrics plan • Develop prototype of Dashboard • Develop SEL Research Strategy • Improve quality of current sales data from NPD, IMR, IDC, EIA • Improve quality of internal EIA & NPD Data Processing • Corporate reporting; improved quality across SEL • Consolidate Budgets for FY 2003 • Identify and qualify potential vendor for retail direct inputs (POS) • SEL-plus distribution of syndicated data • Negotiate contracts for Pan-Division/ segment projects • Solicit industry interest, competitors and retailers Product Sales (& share) Data processing; Syndicated Market Research Collection and Distribution • Formulate SEL (CEG) • Research Strategy • & Budget Improve quality of SEL sales data; POS Consortium

6. Product Research Channel Research Consumer Research 50M units 20K floors 281M people Supply Chain Management Demand Chain Management New marketing strategy drives new research objectives • Sony’s new consumer marketing strategy, the “Diamond Plan”, added a consumer focus to SONY’s marketing, which has been mostly product focused. • While SONY has collected a tremendous amount of data, most of the research has supported the product-focused look at the marketplace. • With our new marketing strategy, our approach to research should accommodate product, consumer, and channel marketing needs

7. Allocation of Investment: • 2% sales = $187M • 8 segments • return on growth Source of Business: • 281M people • $723B spend on Ent. • $66B spend on CE Affluent Mediums & Message Products & volume CE Alphas - Early Adopters Mediums & Message Products & volume Mediums & Message <25 Gen Y 25-34 DINKS/Young Pros Mediums & Message 35-54 Families Mediums & Message 55+ Zoomers Mediums & Message Products & volume Products & volume Products & volume Products & volume CE Betas - In-market/store buying Mediums & Message Products & volume • Marketing plans: • target sweet spots • target touchpoints • most relevant value proposition B2B SOHO Mediums & Message Products & volume Building a Segment-Led Plan

8. 281M Consumers 8 target segments MEL, Recall, Understanding Awareness Relevance Consideration Price Elasticity, Step up Interest promos, switching Intent 50M units Purchase attachments, churn Post-Purchase satisfaction. levels Service Market Insights Increase Demand • Consumer Segment Research * • Quantify size and potential value of each segment • Understand key information affecting their CE and leisure spending • Uses & • Attitudes Study • What drives each segment to CE funnel? • Purchase Process Analysis • What drives customers through each phase of funnel? • What are the key hurdles? Purchase Process * See Appendix for more information on each type of program

9. Syndicated and Primary Research Vendors

10. Product and Segment Sales Performance • Product performance: continue to use POS data to measure product sales. • NPD (Techworld) contract • IDC, others • Segment performance: use consumer panels to measure performance • Long-term goal: POS + consumer data • Build an industry consortium to get POS data crossed with direct consumer behavior profiling • This will allow for the purchase “modeling” that will become our addiction.

11. Consumer Metrics – POS Consortium • Objective • Merge details of POS data with consumer profile data • Goal is to have some system in place for FY 03 • Approach • Work with potential research partners to identify a methodology • Developing consortium of retailers and manufacturers that would participate • Cost depends on a number of factors, including number of initial participants and complexity of methodology

12. CE/IT Purchase Intent (Quarterly) • Objectives: • Gauge on-going consumer interest in our key product areas by our four main life-stage segments. • Methodology: • Quarterly on-line survey with 10,000 completes. • Measure likelihood to purchase within the next 3 months on a 5 point scale. • Value to Business: • Will provide timely, updated information on the “hot consumer products” for the coming 3 months by segment. • Possibility to do custom follow-up “purchase studies” to be able to more accurately measure the conversion of our “intenders” to “purchasers.”

13. Purchase Process • Objectives • Identify the bottlenecks in the context of the purchase process within customer segment and product category • Discover what information sources are being used by potential customers in the different stages of the purchase process and to understand the relative value of various promotional activities. • Identify at what stage of the purchase process customers begin thinking about brand. • Identify patterns in decision making, from need to purchase to usage/servicing • Identify the best sources for different types of information needs • Determine the duration of the purchase cycle • Approach • There was a qualitative and quantitative phases of this project. • Results due mid-October 2002

14. Business Intelligence Dashboard • Objectives: • To provide senior management with timely delivery of market and consumer segment data that can be tracked, monitored and actioned against. • Methodology: • Input: NPD, EIA, IMR, IDC, Hyperion • Output: Market share and segment analysis delivered via Dashboard • Frequency: Monthly and quarterly • Value to Business: • Will provide SEL with a synthesized view of disparate data sources (NPD, EIA, IMR, Sony internal finance) and timely reporting of this market and segment data for business decisions. • Possible performance management tool that will allow for tracking and monitoring of key performance indicators (metrics) that are linked to business targets.

15. Proposed Next Projects (list in development) • Uses & Attitudes Study • Objective: to obtain quantifiable metrics for tracking consumers’ usage and attitudes of electronics, technology, and entertainment; specifically covering: • Product Ownership/Penetration -        Purchase Intent • Product Application/Usage Behavior -         Price Elasticity • Attitudes toward product categories/apps -         Brand Preference • Barriers to technology -         Brand Perceptions • Demographics (in addition to standard) -         General Behavior • Wealth - Work status • Marriage - Media habits • Family status - Gift buying • Second home ownership - Spending • Geography • Ethnographic Panel Research • Purpose: • To richly understand the context each segment’s life as it relates to entertainment and technology and how that evolves from year to year (longitudinal learning) • Specifically Covering: • How analog versus digital works in their lives (attitudes/use) • Understanding application/use of technology • Understanding new applications for segments • Entertainment spending • Product development exercises • Profiling the use of technology and entertainment in their lives • General lifestyle exploratory research.

16. Proposed Brand Equity Research • Objective: Understand the equity of brand Sony within our product categories, and to understand the CE/IT marketplace within which we compete • What does Sony mean within speakers, receivers, dvd, etc… • How does Sony compare to competitors in each? • Approach: Quantitative research with owners and intenders across key product categories to better understand, among other areas • Brand perceptions • Brand consideration • Purchase intent • Benefits: Will help in evaluating the role of various product categories in shaping overall Sony perception/satisfaction levels.

17. Consolidated online report library *note: Method will follow 6/01 GVO proposal

18. Research & Intelligence Objectives • Measure performance by product, channel and consumer segment • Continue product and channel measurement research • Add tool to measure consumer segment P&L • Add greater capability to measure other performance metrics • Develop demand generation insights leading to demand chain management capability • Link consumer intelligence to business decisions • Increase sales through better understanding of customer product usage and buying behavior • Reduce/optimize judgemental costs and increase NITB: understand marketing effectiveness and optimize marketing initiatives • Identify growth opportunities by segment and product category • Optimize marketing investment • Create integrated approach to conducting and using information • Establish process to initiate new research and disseminate information

19. Research & Intelligence Guidelines • Link all research to business decisions • Do not duplicate research efforts • Prioritize research projects to match most critical intelligence needs • Look for efficiencies in combining needs which exist across all product categories and segments - minimize one-off’s • Use secondary or syndicated research that adequately suits business needs whenever possible