However, if the company cuts the price in order to attract more buyers, it runs the very serious risk that a secondary market will develop where consumers purchase the less expensive boxes in China and export them to other countries. This would dilute the company's sales in these areas, and would cause product control issues as the company would have no control over warranties and other quality issues ("Xbox Launch," 2002).
Distribution. Microsoft sells Xbox through electronics retailers in the United States; the product is also available through Microsoft directly. The company has also had success in using distributors in Asia where Microsoft Korea, for example, has worked with Sejoong Gamebox to gain market entry and acceptance (Sung-jin, 2003). Because China is still a developing market, it would be nearly impossible for the company to be successful at entering the market without a Chinese partner. Because of this, the company would be well advised to use distributors in China as it has done elsewhere in the world in order to gain access to key retail distribution points.
Advertising. Advertising in China is not very different from advertising in other countries as the nation has made considerable progress with regard both to the technology available for supporting advertising and the sophistication of consumers who are targeted by advertising. Television advertising makes up the largest segment of the Chinese advertising market, as it does in many other countries; other media include billboards, radio, print ads and the Internet. Sports sponsorship is also a common mode of advertising and promotion (Country Commercial Guide 2004). Microsoft could make use of these media as it has done successfully in other parts of the world; the tie-in with sports sponsorship could be particularly attractive for the company.
Sales Promotion. Although credit cards remain relatively rare in China compared to many other developed ...