Business Plan: Video Game Rental Store

Business Plan: Video Game Rental Store Tuomas Kemppi Thesis DP in International Business THE7LI007-9 2013 Abstract 4 March 2013 Author or authors Group or year of Tuomas Kemppi entry 2008 Title of report Number of report Business Plan: Video Game Rental Store pages and attachment pages 66 + 111 Teacher(s) or supervisor(s) Timo Rima The purpose of this report is to create a business plan for a video game rental store. It includes research on similar companies in other countries, and it determines if the concept would work in Finland. In addition to this, the report also includes research on what steps need to be taken in order to start and run a video game rental business in Finland. The report also goes over the current trends in the video game industry, and takes a look at where the industry is heading. Based on these findings, the report determines what kind of threats the potential changes in the video game industry would have on the video game rental business in the near future. Finally, the report uses the marketing mix to look at the marketing possibilities for a video game rental store in Finland. The marketing part also includes a section for the target customers, in order to find the most effective marketing mix. Based on these findings, the report goes over what marketing options would be most suitable for a video game rental store in Finland. The report primarily relies on secondary information available on the video game industry and its customers. When possible, information on the Finnish video game industry is used, but also information on the U.S. and global video game industry is relied upon, as these factors also influence the Finnish video game retail market. The theory part of this report mainly relies on Thomas Zimmerer’s and Norman Scarborough’s knowledge on how to run a small business, through the book Essentials of Entrepreneurship and Small Business Management. Additionally, Philip Kotler’s and Kevin Keller’s marketing knowledge in their book Marketing Management is also used. The theoretical framework of the report consists of the marketing mix, business plan framework, differential competitor advantage analysis, and the five forces matrix. Keywords Video game rental, business plan, video game retail industry. Table of contents 1 Introduction .......................................................................................................................... 1 1.1 Research methods and purpose of the report ......................................................... 1 1.2 Business Description .................................................................................................. 2 2 Required steps in starting a business ................................................................................. 4 2.1 Creating the business plan .......................................................................................... 4 2.2 Defining the product range and operational method ............................................. 5 2.3 Acquiring the startup capital ...................................................................................... 6 2.4 Renting a store and acquiring store assets ............................................................... 9 2.5 Webpage ..................................................................................................................... 11 2.6 Suppliers ..................................................................................................................... 12 2.7 Employees .................................................................................................................. 13 2.8 Legal issues and insurance ........................................................................................ 15 2.9 Formalities and accounting ...................................................................................... 16 3 Developing the business strategy ..................................................................................... 18 3.1 Vission, mission, goals, and objectives ................................................................... 18 3.2 SWOT analysis ........................................................................................................... 19 3.3 Key success factors ................................................................................................... 23 3.4 Competitor analysis ................................................................................................... 24 3.5 Selecting the right strategy and translating it into action plans ........................... 27 3.6 Establishing accurate controls ................................................................................. 28 4 Video game retail industry ................................................................................................ 30 4.1 Video game retail industry in Finland ..................................................................... 30 4.2 Global video game retail industry ........................................................................... 35 5 Marketing strategy .............................................................................................................. 38 5.1 Target market ............................................................................................................. 41 5.2 Product ....................................................................................................................... 44 5.3 Promotion .................................................................................................................. 45 5.4 Place ............................................................................................................................ 53 5.5 Pricing strategy........................................................................................................... 57 6 Projected financial plan ..................................................................................................... 59 7 Conclusions and recommendations ................................................................................. 63 7.1 Final conclusions ....................................................................................................... 63 7.2 Further research ideas ............................................................................................... 65 References ................................................................................................................................ 67 Attachments ........................................................................................................................... 118 1 Introduction 1.1 Research methods and purpose of the report The purpose of this report is to answer the research problem of how to create a successful business plan for a video game rental store. The report goes over what steps need to be taken in order to create a successful business plan and what these steps will involve for a video game rental store. Figure 1. Research process Figure 1, shown above, demonstrates the research process and research methods used in this thesis. As a part of the business plan, the report will include the analysis of the different marketing options that a video game rental store has in Finland, the current trends in the video game retail industry and how these could affect a video game rental store in the future, the current state of the industry, what competitors exist in Finland, cover the different steps that need to be taken in order to make the store operational, 1 and go over the costs of running the business in order to determine what sales figures the store would need to reach in order to be profitable. The theoretical framework will primarily rely on the business plan instructions found in Thomas Zimmerer’s and Norman Scarborough’s book Essentials of Entrepreneurship and Small Business Management. In addition to this, the report will also use the marketing mix to tackle the marketing options for the business, differential competitor advantage analysis to analyse the various competitors on the market, and the five forces matrix to analyse the video game retail industry in Finland. The data used for these theoretical frameworks was found from secondary information sources online and through personal observations. 1.2 Business Description The main concept of the business is to rent video games for consoles. These include the Xbox 360, Playstation 3, and Nintendo Wii. The type of video rental store planned in this report will not have PC games in its inventory, as PC games often require regis- tering the game online. The planned business will not have any handheld games either, as there are very many different handheld systems and variations of different manufac- turers systems, and it would cost too much to acquire a comprehensive game selection for each platform. The store would be located somewhere in the greater Helsinki region, in a location that has a potential of reaching a large customer base. If the initial store is successful, further stores can be opened, along with the possibility of offering online rental through postal service. The concept of the business will be similar to that of movie rental stores, such as Makuuni and Filmtown. The main difference in the operation method will come from the higher cost of games when compared to movies, and the longer time it takes to pass a game than it does to watch a movie. Initially no drinks or snacks will be sold, but they may be added later on. 2 The competitive

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