Marketing Spotlight Microsoft Competitive Markets And Marketing Strategies

1370 words - 5 pages

Microsoft was founded in 1975, when Bill Gates left Harvard at age 19 to work with high school friend Paul Allen on a version of the BASIC programming language. After moving the company from Albuquerque, New Mexico, to Seattle in 1979, Gates and Allen began writing operating system software. What happened to the company since its founding is a well-known and often-told story. Here are highlighted a few of the key strategies that enabled Microsoft to achieve such remarkable growth in the competition-laden computer industry:Product Innovation: Microsoft achieved early success because of a single product innovation. In 1980, IBM contracted Microsoft to write the operating systems for its new PCs, which led to the creation of Microsoft Disk Operating System (MS-DOS). Since other PC manufacturers desired compatibility with IBM machines, Microsoft was soon adopted as the standard PC operating system. Another, even bigger innovation followed. In 1983, the company introduced the now-ubiquitous Windows, based on a graphical interface common to Apple's Macintosh system. Since it was the first "windowing" software to work on PCs from any brand, Windows - like DOS before it - became the standard for personal computers.While Windows enabled the company to vault to unforeseen heights, it continued to develop innovative software and other products. Microsoft's current big project is a next-generation operating system called Microsoft .Net (pronounced "dot-net"), designed to merge Windows with the Internet directly. Microsoft .Net will allow multiple devices - PCs, wireless phones, pagers, digital cameras, PDAs, and other "smart devices" - to work together over Web connections with unprecedented ease.Brand-extension strategy: Microsoft uses its strong brand name to launch new software products. Some examples include Microsoft Word, Microsoft Office, and Microsoft Internet Explorer. In 1989, Microsoft passed Lotus to become the world's largest seller of software worldwide. At that time, the company boasted the broadest array of software products and applications as well as the highest profit margin in the industry, at close to 25 percent.Launching a new product under a strong existing brand name gives the new brand instant recognition and credibility with much less advertising outlay.Heavy advertising: In the early years, Microsoft used advertising sparingly. In the mid-1990s, however, it began to advertise aggressively. In 1994, the company made two major moves: it hired the head of marketing and advertising from Procter & Gamble and developed its first global advertising campaign. The campaign doubled the company's ad budget to $100 million, and the following year that figure ballooned to $200 million for the Windows 95 launch. Today, it is common for the company to spend $50 million marketing a single product. Its global marketing budget for 2001 exceeded $500 million.Competitive Toughness: Microsoft's aggressive competitive practices enabled the company...

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