I.

EXECUTIVE SUMMARY
Canon Inc., at 80 years old has expanded worldwide in several continents and now
boasts of 2 headquarters, Japan and U.S.A. While still the market leader in cameras
and interchangeable lenses, since 2012, Canon has suffered a drastic decline in income,
particularly in the digital camera sector as a result of the exponential rise in the global
use of the multi-tasking smartphones. After 4 years, smartphones have gotten even
more sophisticated with camera lens quality and functionality that could rival the lower
to mid-range priced digital cameras.

Research shows that 44% of the users reported difficulty in accomplishing their task
without their smartphone. 78% of our market admitted that the smartphone made them
feel productive whether consuming educational content, job hunting, coordinating with
office colleagues or performing work-related tasks. 60% used the smartphone at least
once a week to take pictures, shoot video and upload them on social sites clearly, the
demand has been created by smartphones getting smarter with capability to shoot
under low light and deliver clear, vivid pictures and apps further expanding its use in
countless of way ranging from recreational to work-related, and even utilitarian like
grabbing a taxi or finding a recipe while groceries are ordered online.

All of these smartphones would need a CMOS and Canon can fill that need at better
quality and less cost than its competitors. Sony, the current market leader is struggling
to deliver to other Asian markets (-30%) as most of its supply had already been taken
up by Apple & Samsung - leaving the door hugely ajar for the entry of another major
player. Canon is not an ordinary CMOS supplier. With an arsenal of factories and sales
offices worldwide and an enviable patent record, Canon can eventually grow its market
share since it is fully capable of producing advance products for smartphone
manufacturers who are defining what is cutting edge in their field. Canon can
benchmark on the world market price set by Sony and can decrease this by $2-$4 per
piece. The goal of a $15 USD, cutting edge, ligthtweight CMOS can be the game-
changer in favor of Canon.

Aside from producing the CMOS for smartphones, Canon can also manufacture
interchangeable lenses and allied upsell products. As market leader in interchangeable
lenses for DSLR, it is natural to foray into the realm of producing more modest versions
for the smartphone. There are players like Olympus, Ollio, iPro Lens and Moment Lens
but Canons entry, especially if it acquires the smaller producers, will be the product to
beat. The interchangeable lenses can be sold between $80 - $300 USD per lens or
bundle. This price range is comparable to those being sold in 2016.

The promotion for CMOS is not significant since transactions are made directly with the
smartphone manufacturers (B2B). However, R & D is required to create CMOS that are
high functioning, light, durable and cheaper.

While promotion for the interchangeable lenses is intended for the general smartphone-
buying population, the strategy will mainly target the 18-44 year old bracket which will
effectively comprise 70% of the market. Millenials will be focused on as they are viewed

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as having greater affinity for smartphones (see chart below) and more importantly, have
the buying power and preference for gadgets. Promotion/Ads and sales will be through
the regular channels as magazines and newspapers are still the most trusted,
Internet/social media and through virtual sales portals such as Amazon, Alibaba and
similar sites. Canon distributors, dealers and company website will also handle sales.

Production will commence June 2016 and the prototypes will be ready for initial market
testing within the same month. Marketing through FB, Youtube, Instagram and Flickr will
begin July. Product endorsers and writers will be shortlisted in June 2016 with contracts
and initial PR articles will be released July 2016. Using celebrities as endorsers has
been very effective for Canon, India. A similar strategy will be used but it will cascade
and generate interest on a sustained basis.
There will also be strong emphasis on enabling busy millenials to create beautiful shots
that define who they are - allowing self-expression beyond the usual selfies. The Canon
website will contain a special section devoted to engaging the smartphone user - giving
useful information, troubleshooting, giving webinars and other customer-oriented
activities that will subliminally suggest the expansion of their current smartphone
camera. Initial 25 countries were targeted.

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II. Situation Analysis
Canon is faced with adverse macroeconomic conditions locally and globally. The
strengthening of the Yen versus the Euro and U.S. dollar resulted in substantial loss of
profit from 2009 until 2016. Canon is particularly sensitive to shifting market preference,
technological changes (Internet of Things) and economic changes. The onslaught of
smartphones (androids and iPhones) that are versatile, fast, user-friendly, affordable
and loaded with apps that are fast becoming indispensable in daily life caused Canon
and its main competitors in the camera industry to suffer a steep and very alarming
decline in sales.

Early in 2011 sales for point and shoot or digital cameras declined by 30% - and kept
on falling. Two years later, in 2013, research showed that 45% of consumers use their
smartphones to take photos and only 40% used a digital camera.Flickr, the iconic
photo-sharing site claims that there was a big shift in uploads: from photos taken by
Canon, Nikon and Sony cameras to those taken with iPhone and Samsung
smartphones. In 2013 the ratio of digital camera to smartphone was 1:10. During this
time, smartphones on the average had 5 MP, LED flash and auto focus By 2016 that
had changed to: higher MB, capability to shoot under low light situations, better color,

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clarity, xoom and flash. Best of all, smartphones can now communicate wirelessly with
printers and connect to the cloud, allowing sharing on the fly in social media without the
hassle of docking stations or downloading. To date, the popularity of smartphones
remains on the upswing with no indications of abating.
Research shows that as early as 2012, 60% of users kept the smartphone close by. It
has now replaced many devices such as the camera, book reader, gaming device,
calculator, tablets and other gadgets. Smartphones have kept its owners engaged as
they: communicated by text, video or chat, job-hunted, conducted online banking and
store transactions, monitored via linked surveillance cameras, researched, watched
videos, exercised, played games and did almost all imaginable business & personal
tasks. This ease and speed of use of connected smartphones in consummating sales &
other transactions also threatened the presence of brick and mortar stores and offices.

Telcos played a big role in the surge of smartphone ownership. While there was no
such facility for digital cameras that made ownership easy for any Tom, Dick or Harry,
Telcos have enabled users to acquire the latest smartphone models almost painlessly
with bundled connectivity packages. As telco wars intensified, the associated

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smartphone model became even more attractive - oftentimes truly an offer that was
difficult to refuse.
Hindsight Wisdom: What Could Have Been and Could Be
In 2012, before the logarithmic convert of minions to smartphones, Canon could have
gone the way of Sony; one of its main competitors that chose to ride the tide of the
smartphones popularity early on. Sony, currently the market leader in its field (App. _),
manufactures semiconductors & is the producer of the CMOS (complementary metal-
oxide semiconductor), the ubiquitous semiconductor component of the majority of
cameras mounted on smartphones or otherwise. It also produced a lens that worked
like an independent camera when paired with smartphone, but this product did not catch
the fancy of the public.

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Subsequently, Olympus and other camera manufacturers simplified the process and
created various interchangeable, clip-on lenses created for the smartphone. Moment
Lens, a genius in crowdfunding via Kickstart has partnered with Apple, Samsung and
Nexus, proving that smart entrepreneurship can be the David to the Goliath of big
corporations in the camera industry.
Presently only one Canon product group, the EOS camera with interchangeable lenses
shows some promise of achieving a flat (steady), if not increased sales. Canon has
been the market leader for the last 13 years.
SWOT Analysis

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Marketing Plan
III. Company Description and Products
Founded in 1937 as Precision Optical by Goro Yoshida, the first Canon camera was
created as the inexpensive but high quality Japanese version of the German camera
Leika. Interestingly, its first lens was manufactured by Nikon. From this humble
beginning, Canon Inc. is now one of the leading multinationals in the imaging sector. It
offers consumer, business to business and specialized imaging solutions. Canon Inc.
has two headquarters in Tokyo and New York, with various manufacturing and sales
facilities globally (Appendix 1). It has 4 main lines of business: personal, office,
professional and business. Canon recently acquired Axis (surveillance cameras) and
Toshiba Medical Equipment as a corporate move to balance the declining sales in
optical products, including cameras, projectors and printers. It has always been
quality-driven and innovative steadily ranking 3rd in the number of U.S. patents for
several years, just behind IBM and Samsung.
The impetus of a declining market and the irreversible paradigm shift to owning a
versatile product, seen more as an assistant owning to its functionality rather than just
an electronic device, has given Canon, the sleeping giant a wake-up call to re-
examine its product diversification strategy. In a classic case of, if you cant beat
them, (then), join them, this patent leader will flex its muscle in 2 areas which are
their core specialties, after all:
1. CMOS for an external smartphone market
2. Interchangeable lenses for smartphones. Canon may consider acquiring Moment
Lens, the company successfully launched after being crowdfunded at Kickstarter.
The latter is based on the sachet concept where consumers who are not likely or at
the very least, hesitant to purchase products in their original form or size because of
budgetary reasons (among others) purchase the trial or version. Leveraging on their
initial strength of producing good quality at less cost (harking back to the day when
Canon patterned its first successful product against the very expensive Leica), it can
now create cheap interchangeable lenses customized for smartphones and swim with
the tide.
IV. Marketing Objectives
In a move to make itself more competitive in the global arena, susceptible to fast pace
of innovation and changing market preferences, Canon has shifted its vision from
kyosei or symbiosis (win-win) to san-ji or the 3 Selves which stands for self-
motivation, self-management and self-awareness. According to Fujio Mitarai, Chairman
and CEO of Canon, the change to 3 global headquarters, ushers in an era of a
completely different Canon by 2020. By securing new avenues of growth, Canon will
emerge stronger from the current situation of weakened Japanese economy and global
recession by securing new avenues of growth (diversification) and restructuring our
worldwide sales network to capture the dynamism of global economic growth.
Three major drivers affect the overall direction of product and market planning, creating
2 products are in development as a positive response to adverse situations:

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1. Smartphone supremacy driving traditional camera sales down across
manufacturing companies worldwide. This current loss can be turned around into
a profitable situation as Canon opens up its internal market for its innovative
CMOS to third party smartphone manufactures like Samsung, Apple and a new
entry, Nokia. The current market leader in CMOS (image sensor) sales is Sony
with market share of 40.2%. Canon has its prestige and brand recognition as
plus factors providing bragging rights to smartphone manufacturers that will
integrate the Canon CMOS into its product. The Chart below shows the CMOS
demand:

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The growth of smartphone usage globally is of course paralleled by CMOS
demand. Statista, a global company project that 5B will be using mobile
phones by 2017, with roughly 85-90% as smartphones ( ). However,
despite its popularity, the market for smartphones is still very promising as
cheaper models could still penetrate the vast markets in developing
economies. This is seen to grow even more as feature phones are phased
out.

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2. There is a growing popularity for interchangeable lenses. As customers of
standard DSLR cameras became more discriminating, the sales of
interchangeable lenses became more popular. In fact, at Canon, though other
product drivers were down, the sale of interchangeable lenses were consistent
and Canon remains unsurpassed as the market leader for this product worldwide.

However, this success did not translate to the smartphone market. In a

bandwagon move that recognizes trends, Canon will enter this market to
challenge Sony, Olympus and Moment Lens. At the moment, smartphone market
leaders Samsung and iPhone have not yet marketed their own branded
interchangeable lenses.

Canons smartphone interchangeable lenses will offer the same quality and
versatility found in its more expensive DSLR models but at an unprecedented low
price. It may also buy-out Moment Lens, a start-up crowd-funded through
Kickstarter. This company embraces the quality philosophy & innovativeness of
Canon but can benefit from the latters global reach and financial capability.
Moment Lens, on the other hand, brings Canon to the realm of the millennials
an invigorating and trendy shot in the arm a gracefully aging giant.

3. The rise of social media and IoT has revolutionized the way smartphones are
used. Compared to the past, documentation is now a venue of self- expression:
the very arena which was the Achilles heel of any camera that could not match
the speed and ease of communication of smartphones.

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V. Target Market and Market Share (5 Year Plan)

In 2012 80% of the global population had mobile phones. Out of that, only 1/5 or 1B
were smartphones. In 2016, barely 4 years after, feature phones are almost a relic,
much like digital cameras. There will be 2.16 B smartphone users by 2016 which
represents an industry growth of 12.8% from 2015. By 2018, 1/3 of the population
worldwide or 2.56 B people will be on smartphones.

All of these smartphones would need a CMOS and Canon can fill the supply chain gap
with consistent supply as well as better quality and less cost than its competitors.

Canon will not be producing its own smartphones but will support the production of high
quality cameras mounted on smartphones through its high quality CMOS image sensor,
thus not posing as a direct threat to the smartphone manufacturers & vendors. With the
insufficient production of CMOS from that China and Japan, Canon is poised to enter
the market and take up the slack. The market share projected is akin to Sonys growth
from 2009 2014. Sony did not start out as the market leader but steadily increased its
market share when Apple and Samsung patronized the brand. The CMOS market is
fast expanding, rising by 80% from 2008 levels to $8.65 B in 2009.

Canon will duplicate this feat and possibly, even surpass Sony as the market leader.
Most of the sensors will be sold to Apple. Canon has the R & D and manufacturing
muscle to support this strategic move. Vladimir Koifman of Image Sensors World
reported (April 2015) that Satoru Oyama, a semiconductor analyst at research firm IHS
Inc., predicted Apple likely would consider buying image sensors for iPhones elsewhere
if another company could match Sonys quality and price.

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Samsung may also be overwhelmed by the current demand for CMOS and choose to
outsource a certain percentage to Canon. In a synergistic move that leverages on brand
trust and recognition, Samsung can capitalize on the Canon name and market these
smartphones under a different model name something that would be beneficial in
targeting those with a discriminating eye for excellent images that Canon lenses are
known for. Nokia can also leverage on this kind of branding synergy as it enters the
burgeoning market for Android phones.

There may be other markets other than the top players. In May 2015, Tech First Post
reported that disgruntled Chinese vendors such as Xiaomi Technology, Huawei Device,
Coolpad and ZTE, are looking into other CMOS suppliers as Sony has fallen by 30% of
its target supply as a result of it prioritizing the Apple and Samsung accounts.
Reportedly the shortage for 2nd and 3rd tier vendors ran as high as 70-80% - on top of
that, newcomers LeTV, Gree Electric Appliances and Daren will create their own
demands over time. Clearly, Canon can fill the void as its manufacturing sector and R &
D with its various patented technologies can match the specific needs of these vendors.

Grow Global Market Share for Smartphone CMOS to:

1. 10 % of $12 B by 2017 (0ver 2B users worldwide)
2. 20 % of $13 B by 2018
3. 25 % of $15 B by 2019
4. 30 % of $17 B by 2020
5. 35 % of $ 19 B by 2021

High end models are supported by manufacturers for a long time so that any additional
gadget for the phone, especially those considered on the expensive end (e.g.
interchangeable lenses) can be viewed as an investment since the buyer has plenty of
time, between 3-5 years to enjoy it. The advent of cheaper versions and increased
access to connectivity has undoubtedly increased usage.
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Currently the available interchangeable lenses in the market vary a lot in terms of price
and quality. Most of these are sold online and 80% of the brands can be considered
generic. The market is wary since most of the products do not deliver what their ads
promise. Canon will not compete in the inexpensive lenses category. It will enter the
market as a mid-priced to high-priced interchangeable lens for smartphones and sell on
the strength that these lenses can turn some smartphone models into mini versions of
its beloved DSLR EOS series. Competing products like Olloclip and iPro Lens are
established but to date, these three products seem to be more popular:
1. Sony DSC QX10 Lens-Style Camera with 18 MP Sensor sold between $250-
$299. This model can be used for zoom, macro and low light situations. This
lens may be used unmounted but is a bulky and heavy, defeating the purpose of
being compact for the smartphone.
2. Olympus Air A01 16MP Interchangeable Lens Smartphone Camera Body sold at
$400.
3. Moment Lens sold at $100 each for 3 types of lenses. This is the most viable
company for acquisition. However, it would be most beneficial to Canon if Olloclip
and iPro Lens are likewise acquired.
Grow the market for Interchangeable Lenses for Smartphone (5 years)
1. 30% of market share when it enters the market in 2017
2. 40% of market share when it acquires Moment Lens by 2018
3. 45% of market share when it has bundling tie-ups with smartphone
manufacturers by 2019
4. 55% of market share by 2020
5. 60% of market share by 2021
VI Promotion
Today, 80% of mobile users are now on smartphones with main market share by
platform as follows: Android (46.9.7%) and iPhone (28.7). 89% of users had their
gadget throughout the day, with an average monthly usage of 500-600 Mb per month.
Almost 70% of total users belonged to the 18-44 age bracket, with highest penetration
in the millennial market (24-25 years old) at 62%, followed equally at 54% for those in
the 18-24 and 35-44 age brackets, 39% for those 44-55, 30% for those 55-64, and 38%
for those 65 and above.

Significantly by usage, almost 50% were into photo/video and music, a fact that Canon
could use fully to its advantage. 75% downloaded apps and 25% were into gaming. Pew
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Internet Center, a research group specializing on Internet, science and tech, reported
that in 2015, 64% of American adults now own a smartphone of some kind, up from
35% in the spring of 2011. Smartphone ownership is especially high among younger
Americans, as well as those with relatively high income and education levels. This is the
snapshot of smartphone usage globally that serves as a guide to its promotion and
distribution efforts:

How will Canon communicate its product value proposition & pricing to this market on a
global scale? For the CMOS project, Canon will adopt a direct approach to the major
and minor players in smartphone manufacturing. For the interchangeable lens market,
the promotional plan adopted by Canon will be focused on a 6-month period which
targets the launch (Thanksgiving) and continues throughout the Christmas period,
traditionally, the spending spree months when people have more disposable cash due
to bonuses and are more generous. Promotion has 2 objectives:
1. Increase brand recognition of Canon so its other core products can benefit
2. Gain acceptance of the new products.
Promotion will involve:
1. Traditional advertising (above and below the line) including placement in
popular/trade magazines & other publications, TV, billboards, trade shows
2. Store promotions (distributors, dealers)
3. Internet promotion:

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 Digital ads
Websites (including Canon)
PR and blogs; Influencers and Endorsers
Social Media (Facebook, Instagram, Youtube, Vimeo)
Surprisingly in this digital age when sales of magazines and newspapers are declining,
consumer trust is still highest with traditional ads. Combining these 3 modes of
advertising leverages on the study which revealed natural synergies between print (e.g.
magazines) and the Internet.

Marketing June July Aug Sept Oct Nov Dec Jan ST

Expense 2016 2017
Digital Ad 0M 0M .1M .1M .3M .3M .5M .2M 1.5M
Websites & .5 .1 .1 .1 .1 .1 .1 .1 1.2M
E-com Portal
PR & Blogs .1 .1 .1 .1 .2 .2 .5 .2 1.5M
Print 0 0 .5 .5 1 1 2 .5 5.5M
TV 0 0 0 1 1 1 2 .5 5.5M
Social Med 0 0 0 .5 .5 .5 1 .5 3.0M
Store ADs/ Canon Canon Canon Canon 2 2 2 Canon 6.0M
Tradeshows
Billboards 0 0 0 0 2 .5 1 0 3.5M
Staff, CS .2 .1 0 0 .1 .1 .1 0 0.6M
Training
Product 3M .1 .1 .1 .2 .2 1M .2M 4.9M
Endorsers &
Influencers
Subtotal 3.8 .4 .9 1.5 7.4 5.8 10.2 2.7 33.2M
Grand Total
These figures are inclusive of events and advertising cost of creatives. Alternatively, if
sales appear stable by December 2016, a quarterly marketing expenditure can be
considered.

VII Pricing
There is an upside to being a late entrant into a market that is stable. At this point,
Canon can be a price-taker and can piggy-back on the current going rate. In both the

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CMOS and the interchangeable lenses situation, there exists a near-perfect conditions
where prices approximate each other according to class or quality. There are still pricing
tactics that can be resorted to such as lowering the price set by the market leader, while
offering the same, if not improved quality.This self-initiated change is a must as it is
moving from ground zero in an active but not saturated market.

Canon may set variable price and set discounts and promotional support depending on
volume of sales, market-segment requirements, purchase frequency, service contracts
and other factors. Initially, there will be geographical pricing since Canon has the
advantage of presence in several continents with manufacturing and warehousing
capability.price discounts and allowances, promotional pricing, discriminatory pricing,
and product-mix pricing.
A. CMOS
Sony is the market leader among CMOS producers and has a performance
profile closest to Canon, making it an ideal benchmark. The model that has the
best quality is the 21 megapixel Exmor RS IMX230 stacked CMOS image
sensor which was launched in 2015 and priced at Y2100 (JPY) or $19 (USD)
each. According to Sonys press release, this stacked CMOS imaging sensor
features compact size, higher image quality and improved functionality. In
addition, its ability to track fast moving objects and photograph or video
backgrounds and subjects vividly and clearly in high contrast situations (eg.
backlit) makes it difficult to beat.
B. Interchangeable Lenses
Each interchangeable lens will be marketed between $ 80 - $300. Accessories
will also be marketed. Complete kit bundles will be marketed for value. We target
95% customer satisfaction with a goal of 80% repeat customer for the first year
and 60% for the second year after purchase. This is highly possible because avid
photographers who may have beefed up their smartphone to capture shots
previously possible only with DSLR may be shopping for additional lenses and
accessories after the first purchase.

VIII Distribution Strategy

The CMOS is a business-to-business product and can be shipped directly to the
smartphone manufacturer. Canon can do this through its global headquarters in Japan
or the Americas. However, the interchangeable lenses can be distributed a number of
ways since it needs to be available as far and wide as possible. One way to control
inventory and logistics is to market through direct distribution from Canon Japan where
the lenses are manufactured to the:
Canon website
Dedicated Interchangeable Lens website which can be a cross between a social
media site and an informational channel. This website can also showcase vetted
photos and videos shot with the lens and host webinars on tips, tricks and technical
issues involving the lenses.
Eventually, this will become the main direct to consumer market strategy by mid
of 2017
Distributor & Dealer websites

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 Commercial portals - Amazon, Alibaba, Best Buy and others
Department stores with online catalog such as Macys, Sears and the like.
100% of the older model (last season) will be sold online at a discounted price or
bundled with telco promotional plans.
The lenses will be sold in main Canon outlets globally, especially in locations where
there can be a demonstration of use. It will also be made available as an option on
smartphone-internet bundles as an add-on. Current distribution in all existing channels
will continue but this will be decreased as the website becomes more functional.
Emerging markets may need more of these hands-on stores in the first two years.

IX Implementation Program, Plan & Measurement

In implementing the marketing budget, typically the following are considered:
Advertising, promotion and public relations including endorsers & influencers
The way the competition advertises and the size of the market and business lines
are the main determinants. It can be as low as 1% to as high as 30-50% on major
launches. Eventually, it may stabilize between 15-18% of total operational costs.
Trade shows and special events as needed
Design & printing costs of all advertising peripherals
Website development and referable expenses and
Training costs

The table below will be use to determine as a guide to actual financial planning.

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In conclusion, Canon is repositioning itself to regain market supremacy. Close on the
heels of its two main diversification schemes, the surveillance and medical equipment
market, Canon will ride on its core strength and brand image to eventually become the
market leader for CMOS production and interchangeable lenses for smartphones, within
5 years from launch.
.

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