Business Category and Competition of Push Star Game Store - Case Study Example

Category and Competitive Analysis of a game store business Category and Competitive Analysis of a game store business Category Analysis Category analysis is defined by Lacobucci as the consideration of the per capita sales of the category in a region and relating it to the per capita sales of the category in the country as an entirety (Lacobucci, 2001). Russell defines category analysis as a process aimed at getting an understanding of the performance of a battery category over time (Russell, 2009). From these two definitions, we realize that category analysis involves a review of the trends involving a certain brand and the category of the brand. Category analysis aids a business person to understand the state of the category of the business if it is stagnant, a great opportunity, or an alternative category augmenting to the ability of making correct business decisions regarding the selected business. Category analysis is the main aim of this part of the study with specific emphasis on Push Star video game store. a. Marketing trends There are different marketing trends visible in the game store business including the market share that is currently large, owing to the large amount of young adults and adolescents who have embraced playing of games. The market for games is poised for growth in the future owing to increased middle age population and the realization of the benefits of games for the development and brain activity of young children and adolescents. There are a low average category penetration and usage in the market providing an opening for more market share for companies in the market and those entering the market. Market share changes are evident in the market owing to the need for each firm to adopt technology and innovation with a shift in market share favoring firms that have been quick in adopting technology and new product development. The high population growth rate and immigration of people to the London, where the business is located, allows for the development of game store category in the future. There have been increasing sales and profitability in the games store category that is attributed to immense acceptance of gaming in the United Kingdom and other areas, increased access to games through more game stores, and innovation and technology that has driven to sector to more profitability and success. b. Marketing activity The main distribution channels used in the category is brick and mortar store locations but there has been an uptake of online stores and delivery systems for many firms ensuring convenience, low cost, and accessibility to global customers (Tybout, 2005). Physical stores have high prices compared to online stores owing to the different cost saving measures attributed to online sale of gaming instruments including low electricity bills, rent, and other utilities in physical stores. Therefore, competitiveness is augmented when there is a combination of both online and physical sale by a business in the category. Brands in the category are marketed through word of mouth advertising, online advertising, search engine optimization, use of brochures and posters among other advertisement methods. c. Pricing and sales The gaming market has different gadgets that are sold for different prices ranging from $ 7,500 to $ 15,000 depending on the sophistication and the type of user. There are different types of users with the most selling segment being the enthusiast segment that looks for style and performance when purchasing. The performance segment looks for the best performing gadget and is willing to pay the highest price while mainstream is looking for any gadget. Sales have been high in the category with enthusiasts contributing the highest sales at 44%, performance having 30% of the sales, and mainstream market segment having sales of 26%. d. Environmental factors Different environmental factors affect the performance of the game stores category including demographic, economic, technological, and political factors influencing sales, revenue, and profitability. The demographic factors in the game stores category is gender that consist more women than men, generational factors where many gamers are between the ages of 40 and 50, and age with the average purchaser having 40 years. The economic factors are household income where households with large income are in a position to spend more money on gaming, business cycles that influence the ability of the consumers to make purchases where sales decrease under recessionary and increase under inflationary pressures. The other economic factor affecting sale of gaming devices is demand elasticity, since the demand for gaming gadgets is susceptible to price changes owing to high substitutability rates in the category. Technological factors in the category are innovation that is the main driving forces for success in the gadget store business where stocking and selling of products developed from the latest innovation and high functionality is the main priority for success. Compatibility, ease of use, and switching costs to new hardware are the other technological factors affecting the category. The political factor affecting the category is regulation of the industry that has an important role in the growth and success of technology for a certain product. e. Porter’s five sources Porter’s five forces aid in understanding the performance of the category in terms of profitability, strengths, and weaknesses of the industry (Roy, 2009). The category has high threat of entry into the market especially for firms that embrace technology, research, and development. There is high competition in the industry but the market is not yet saturated giving space for new firms to operate profitability and embrace in research, technology, and innovation will see the profitability of these firm soar. Suppliers have low bargaining power in the category owing to high added-value of products, sale of established products, and innovation of new products by other suppliers augmenting supply (Porter, 1980). Customers have high bargaining power owing to the availability of many substitutes in the market making price hikes in the category a minimal phenomenon. Here is a high threat of substitutes in the category from research and innovation of new products and the need by consumers for highest priced and most functional products. From the category analysis, it is evident that the category has great potential and opportunity for a better future for the gaming stores both in London and beyond. This future is fueled by technology, innovation, and research & development that have to be incorporated by all stores to access profitability and success. Competitive Analysis Competitive analysis is an ongoing process that allows a business of firm to understand the competition strengths and weaknesses allowing the business to develop better products and services, marketing effectiveness, and market positioning (Fleisher & Bensoussan, 2007; Oswald, 2012). Wagner et al. divide competitive analysis to the analysis of the competition in broad and narrow view where narrow competition analysis entails analyzing competition from companies selling the same product (Wagner et al., 2008). Broad competition analysis, on the other hand, is the analysis of the direct and indirect competition within the industry in which a given firm is operating (Lacobucci et al., 2003). This study aims at analyzing the competition of a games store located in London as a measure of gaining insight and understanding to the possibility of success of the Push Star business venture. a. Characteristics of the competition The main characteristics of the population are the sale of products from different gaming consoles manufacturers including Nintendo, Microsoft, and Sony. The products offered by the competition include Sony’s Play station3, Microsoft’s Xbox 360, and Nintendo Wii’s gaming system. All the competitors aim at using innovation and technological development for marketing and other strategies to allow the gain market share, increases revenue, and making more profits (Wierenga, 2008)The other characteristic evidenced by the competition include the provision of after-sale services to ensure customers are satisfied and result in client loyalty. Competitors also use both online and physical stores to ensure convenience and access by many clients to the business increasing their ability to be profitable. b. Strengths and weaknesses The main strength of the competition is early entry to the market resulting in having high client loyalty and better understanding of the needs of the different market segments in the market (Fleisher & Bensoussan, 2007). This has allowed the competition to be better placed at making more revenue and profits. The other strengths of the competition include better access to low priced suppliers using supplier contracts, ability to make sales to new clients owing to referrals from clients, and reduced operating costs having set operations early. However, the competition has some weaknesses including slow ability to have the latest technologically advanced gadgets in the market, and this forms the main basis of our competition. The other weakness evident in the competition is the inability to maximize online sale and click on delivery that has allowed our business this make sales to a high amount of buyers who prefer online purchases and delivery to their doorstep. The strengths and weaknesses of the competition depict the need for a better rolled out plan and adoption of technology and innovation for any business to succeed against this competition. The competitors have more strengths than weaknesses allowing them to succeed in a competitive and demanding industry for the participants. The competition is also characterized by small stores scattered over a large geographical area and have low presence and use of online communication and no delivery systems (Morris, 1996). c. Future strategies The future strategies of the competition include taking steps to access more of the online market for gaming devices (Graham & Harker, 1998). This will allow the competition have a better access to a lot of consumers that have shifted from brick & mortar stores to online purchases and for convenience purposes require door-to-door delivery. The competition will have to adopt these new measures in the future of they will remain at the top of the industry and remain profitable. The other future strategies available for the competition include improving their ability to access newly developed and innovative products in the market as a measure of meeting the needs of the enthusiast market as soon as new products are released to the market (Coyne & Horn, April 2009). d. Determination of the position It is evident that the competition is better placed than Push Star to make sales now; however, access to online purchasers for Push Star has allowed the business to be competitive and offers it competitive advantage (Kermally, 2003). Push Star has high rates of online sales owing to the augmented use of technology and development of better strategies of meeting the needs of generation Y consumers. The introduction of click and receive platform at Push Star for all consumers has allowed the business differentiate itself from the competition and allowing Push Star address the needs of the consumers better. Push Star has been in a position to access innovation and recently developed products in the market allowing for the access of enthusiast consumers and new gamers searching for the best gadgets in the market. This has allowed the business to be one of the most sought after new gaming stores in London and other areas through the online platform and the innovation behind the click and receive giving consumer’s convenience, value for their money, and access to the best within a short time and at a competitive price. Through this, Push Star is poised for growth and development and has a better position of accessing more market. This will be possible if the competitive advantages of access to the latest gadgets in the market and ability to meet the need of online consumers as well as gain enough ground in the physical store is maintained for a long time. References Coyne, K. & Horn, J. (April 2009). "Predicting Your Competitors Reaction," Harvard Business Review, p. 90-97. Etzel, M. J., Walker, B. J., Stanton, W. J., & Stanton, W. J. (1997). Marketing. New York: McGraw-Hill. Fleisher, C. S., & Bensoussan, B. E. (2007). Business and competitive analysis: Effective application of new and classic methods. Upper Saddle River, NJ: Financial Times Press. Graham, P. & Harker, D. (1998). Marketing: Managerial Foundations. South Melbourne: Macmillan Education. Kermally, S. (2003). Gurus on marketing. London: Thorogood. Lacobucci, D., & J.L. Kellogg Graduate School of Management. (2001). 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