DEVELOPING MARKETING STRATEGY FOR AN ONLINE SOCIAL GAME

TR NG I H C M TP HCM UNIVERSITÉ LIBRE DE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL MBAVB4 LAM VI QUOC DEVELOPING MARKETING STRATEGY FOR AN ONLINE SOCIAL GAME MASTER PROJECT MASTER OF BUSINESS ADMINISTRATION (PART-TIME) TUTOR’S NAME: DR HOANG THI PHUONG THAO HO CHI MINH CITY 2012 Acknowledgement I would like to express my heartfelt gratitude and deepest appreciation to my research supervisor, Dr Hoang Thi Phuong Thao, for her guidance, share of experience, valuation suggestions and comments I would also like to thank my friends in Empire Corp who have helped me a lot during my research: Nguyen Thanh Trung, Hoang Thanh Trung, Pham The Minh from the board of directors of the company and other personnel from the development, support and marketing department Last but not least, I would like to thank all of my classmates in MBAVB4 who have always supported and encouraged me to complete the research Abstract Empire Corp is a successful company in launching self-developed online casino web game However, due to the restriction from the government on this kind of game, the company is facing challenge in sustaining the growth of the company with that set of game It has been decided to develop another set of new game which is not restricted by the government to reduce the portfolio risk of the company as well as to maintain the growth rate In that context, a social online web game is selected to fulfill this goal The project is designed to help Empire Corp come up with a marketing strategy to launch the new game The outcome of the research will be the proposed targeting segment, the marketing mix to help the game become a successful online game Table of Contents List of figures Abbreviations Chapter 1: Introduction 1.1 Rational of the study 1.2 Statement of the problem 1.3 Research questions and objectives 1.3.1 Research objectives 1.3.2 Research questions 1.4 Research approaches 1.4.1 Qualitative research 1.4.2 Quantitative research 1.5 Scope of the study 1.6 Structure of the study 1.7 Significance of the study Chapter 2: 2.1 Literature review Porter’s generic framework theories 2.1.1 Cost leadership strategy 2.1.2 Differentiation strategy 10 2.1.3 Focus strategy 11 2.2 2.2.1 Ansoff’s matrix 11 Market penetration 12 2.2.2 Market development 12 2.2.3 Product development 13 2.2.4 Diversification 13 2.3 Marketing mix 13 2.4 Customer participation and personalization 15 2.5 Product levels: the customer-value hierarchy 16 Chapter 3: 3.1 External and internal environment 18 External environment 19 3.1.1 Types of online games 19 3.1.2 Market overview 20 3.1.3 Competitors 24 3.1.4 The barrier of the industry 27 3.2 Internal environment 29 3.2.1 Empire Corp overview 29 3.2.2 People 29 3.2.3 Processes 30 3.2.4 Program 31 3.2.5 Performance 31 Chapter 4: Data analysis and findings 32 4.1 Characteristics of the respondents 33 4.2 The loyalty segment 33 4.3 The high value segment 35 4.4 Community loyalty 37 4.5 Crucial factors: IT infrastructure and customer service 39 4.6 Key promotion channels: word of mouth and game forum 40 4.7 Customer participation and personalization trend 42 Chapter 5: 5.1 Proposed Marketing Strategy 43 SWOT Analysis 44 5.1.1 Strength 44 5.1.2 Weakness 44 5.1.3 Opportunity 44 5.1.4 Threat 45 5.2 Proposed marketing strategy 45 5.2.1 Objectives 45 5.2.2 Segmentation, targeting, positioning 46 5.2.3 Differentiation and competitive advantages 46 5.2.4 People 47 5.2.5 Processes 47 5.2.6 Product 48 5.2.7 Price 49 5.2.8 Place 50 5.2.9 Promotion 51 5.2.10 Performance 51 5.2.11 Evaluation and control 51 5.2.12 Conclusion 52 References 53 Appendix 54 5.3 Online game survey 54 List of figures Figure 2-1: Porter's generic framework Figure 2-2: Ansoff's matrix 12 Figure 2-3: Product levels 16 Figure 3-1: Gunny web game published by VNG 22 Figure 3-2: Tam Quoc Truyen Ky published by SGame 22 Figure 4-1: Respondent occupation 34 Figure 4-2: Hours spent per day on online game 34 Figure 4-3: Number of games played last year 34 Figure 4-4: Age of the users who spend more than 300,000 VND per month on online game 35 Figure 4-5: Expense per month on online game of segment age above 23 36 Figure 4-6: Expense per month on online game of segment age below 23 37 Figure 4-7: The benefit apart from relaxation gets through playing online game 38 Figure 4-8: The top most reason makes users stop playing an online game 40 Figure 4-9: How users know about a game 41 Figure 4-10: Do users' colleagues play online game together with them? 42 Abbreviations CEO : Chief Executive Officer 4P : Product, Price, Place and Promotion SWOT : Strength, Weakness, Opportunity and Threats MMO : Massively Multiplayer Online MMORPG : Massively Multiplayer Online Role-Playing Game RPG : Role Playing Game ADSL : Asymmetric Digital Subscriber Line SMB : Small and Medium Business CSM : Cyber Station Manager VND : Vietnamese Dong SEO : Search Engine Optimization BOD : Board of Director Chapter 1: Introduction RATIONAL OF THE STUDY STATEMENT OF THE PROBLEM RESEARCH QUESTIONS AND OBJECTIVES RESEARCH APPROACHES SCOPE OF THE STUDY STRUCTURE OF THE STUDY SIGNIFICANCE OF THE STUDY 1.1 Rational of the study Empire Corp (name disguised) was established around years ago and has been very successful in developing and launching a set of casino online games The growth rate of the company is quite impressive and has now reached the size of more than 70 employees and owed a million user market size However, lately, the CEO of the company sensed that it’s unlikely the company could keep the existing growth rate with the existing games due to the more and more aggressive competition and the un-support government policies in developing that kind of online games which had been a very big barrier to the growth of the company To continue growing the company to the next level, it is necessary to move forward with a different path Several different kinds of games were investigated and the conclusion came to a horse racing online social game 1.2 Statement of the problem The horse racing online social game has been put under development and is about to finish However, the marketing strategy to launch the game has not been considered up till now It’s the time to work on the marketing strategy so that the game can be launched successfully 1.3 Research questions and objectives 1.3.1 Research objectives In order to solve the problem above, the research has the following objectives: To analyze the current situation of the company and the market To identify the target segments which the game should focus on so that To identify the positioning of the new game as well as its points of differentiation To identify the marketing mix strategy to launch the new game successfully 1.3.2 Research questions The research problem leads to the following research questions: 43 for other game items which can make them different and unique inside the game, they are willing to invest time, effort and money to get those and feel very satisfied when it is achieved Chapter 5: Proposed Marketing Strategy SWOT 1.1 Strength 1.2 Weakness 1.3 Opportunity 1.4 Threat PROPOSED MARKETING STRATEGY 2.1 Objectives 2.2 Segmentation, targeting, positioning 2.3 Differentiation and competitive advantage 2.4 People 2.5 Processes 2.6 Product 2.7 Price 2.8 Place 2.9 Promotion 2.10 Performance 2.11 Evaluation and control 2.12 Conclusion 44 5.1 SWOT Analysis In order to sustain the growth of the company, it’s required to analyze its SWOT so that proper strategies can be proposed to cope with the existing industry context 5.1.1 Strength The internal strength of the company is great Thanks to the successful experience in developing and running the existing online game product, it owns an excellent team who can create the game scripts, design the graphics, programming the 2D online game, operation the infrastructure and handling customer care Besides, more than two years of running the system has helped the company in forming the relate process and establishing the partnership network in that business On top of that, the successful of the existing product has helped the company in accumulating enough capital to fund more investment for the longer term and bigger growth of the company 5.1.2 Weakness Although the company owns of great development team, their skills mainly focus on casual and social web game Developing sophisticated action and MMO game are out of their knowledge Besides, customer relationship management was not yet paid enough attention Customer issues were not communicated and escalated in time which resulted in slow response in customer support and complaint resolution Customer insight was not done properly and hence the performance of the marketing activities was not measured accurately 5.1.3 Opportunity The industry is growing fast and its growing trend will still last for years to come Many factors are supporting this growth:  The internet bandwidth of Vietnam is increasing year by year More and more people are now able to experience the high speed internet provided by various ISPs With internet subscriber reached the number of 21 million in 2011, online services are easier and easier in reaching their target audience 45  The majority of the population is the young generation which accounts for more than 60% of the 88 million people who has a great need in entertaining What’s more important is that those young people are earning more and more money which can help them to satisfy their needs The immature legal framework in managing online game is also an opportunity for the company The government ceased the license approval for all game since the beginning of year 2011 Because of that, the game publishers were reluctant in importing new games and, hence, there had been almost no new game introduced last year making the game player starve in experiencing new product While the government is not supporting the action and MMO games, which are the favor of the game publishers, due to their violent factor, it expresses less restrictive on the casual and social game Hence, it opens up a promising door for the company to enter the market at this precious moment 5.1.4 Threat The audiences of the new social game may be different from the existing product It is required the company to build other channels to reach a much broader audiences Besides, customer insight needs to be done much better so that the new game can satisfy them 5.2 Proposed marketing strategy 5.2.1 Objectives Based on the collected primary and secondary data, as well as the analysis and findings, strategy for the game is proposed The objectives of the strategy are to achieve the following after launching the game months:  Attract million of registered users  Attract 100,000 users pay an average of 50,000 VND per month on the game which contribute to billion of VND of revenue per month 46 5.2.2 Segmentation, targeting, positioning Based on the data analysis and findings, it shows that the following segmentation is worthy to target:  People who are age above 23  People whose occupation is: office worker, management executive and small business owner That segment is more loyalty than the others and is willing to spend more on the online game due to their high income In order to attract the users from that target segmentation, the game needs to be positioned itself as a community game where users are provided an environment not only to relax but also a place equipped with various facilities to build up their friendly network 5.2.3 Differentiation and competitive advantages As Empire Corp is a SMB company, direct competition with the market leaders or targeting all segments of the market is definitely not a good strategy Instead, it should follow the “focus, differentiation” strategy in Porter’s generic framework The differentiations of the game will be focus on building a platform inside the game where customer participation and personalization can be achieved Those two points of differentiations are the new and growing trend of the new marketing realities and it will generate high profit margin The differentiations of the game are backed by the following competitive advantages of the company:  The company owns a development team who can handle the full cycle development of a new game This is a key advantage as there are very few companies in the market own this capability With this skill, the company can quickly adjust the game and relate platforms to adapt the needs of the users 47  The company is familiar with the procedures in getting the license for a new game and the relate platform websites Also, it has established good relationship with contacts inside the government office that can help to streamline the administrative processes 5.2.4 People As the above analysis shows that, customer service is one of the two key factors which will keep the users from leaving the game More training should be provided to the customer service personnel so that they can handle, keep track and follow the complaints much better Besides, a specialized team should be formed to study and understand the behavior and the needs of the users by analyzing their activities recorded in the databases The team should also actively contact the VIP users to better serve and care them as well as hold more offline activities with them so that more information on the community can be retrieved and to build a more comfortable, attractive game for all users 5.2.5 Processes In order to sustain a level of satisfaction from the users, processes need to be defined and enhanced so that consistent things are being done by every member in the customer support team Processes also help to communicate the issues between operation team and the development team easily so that the most irritated issues encountered by the users can be addressed in a promptly manner It will also help the customer support team have the most up to date information from the development team so that proper information about the upcoming features, promotion events is not miscommunicated to the game users The processes also help the supervisor and the management team can have a thorough inside into the situation and can get issue escalated to address in a timely manner The result of this will reduce the unnecessary frustrating feeling from the users 48 Hence, the processes surround the following areas will need to be defined and enforced to carry out consistently:  Processes in handling and keeping track complaints from the users Priority of the issues is set accordingly: Response time is being tracked Customer satisfaction level on the per case basis is recorded Report is generated periodically  Processes in information communication between customer support team and the system operation team: This ensures all updates to the system are communicated clearly and timely to the support team  Processes in information communication between the customer support team and the development team: information of all customer encountered issues with proper priority and severity are transferred to the development team The roadmap of the patch and feature build from the development team is also communicated to the support team In order to have those processes implemented successfully, IT software will need to be developed The software will dramatically reduce the time as well as minimize the human errors during the operation 5.2.6 Product The social online game product will be mapped to the five product levels of the customer value hierarchy as following:  The core product: as the game is positioned itself not only as a normal online game for relaxation, it is also a place to strengthen friendly relationship and a place to build friendly network The core product will provide is the community-strengthen environment  The basic product: at this level, the product is a web browser online game where users can easily access through an internet browser at anytime, anywhere as long as they are equipped with a PC and an internet connection 49  The expected product: The game will need to be designed with adequate graphic Simple and easy interaction as the main target segmentation does not want sophisticated control and does not want to spend too much time on learning the new game It is necessary to be stable and reliable so that users not encounter too many issues while playing the game Customer service support also need to be provided promptly and nicely when the complaints are raised  Augmented product: required technology will be applied so that customer involvement and personalization can be achieved at the maximum level As the IT technologies become more and more advance and the company can control and understand the needs of the users, this has been proved to be achievable easier  Potential product: This level of customer value is not a yet a concern at the moment as, in developing country such as Vietnam; competition mostly takes place at the expected product level 5.2.7 Price The game will not charge users on the time use basis Instead, the game will generate revenue by selling various game items to the users Especially, it will charge more for the items which brings personalization, prestige for the users The price in online game is not sensitive Users usually not compare the top-up fee of different games As long as the game satisfies their needs, they are willing to pay However, it is also noted that the top-up face value for each time should not be set high The appropriate minimum value should be 10,000 to 20,000 VND for each time top-up This is because of the psychological factor of human being Making decision to top-up 10 times of 10,000 VND is easier and faster than one time top-up of 100,000 VND Higher top-up face value can be encouraged by increasing the promotion value along with them The price will also need to be separated for two lines: one for direct sale and the other for the agent A discount (around 20%) will need to be allocated to the agent so that the agents help to expand the market and take care of the customers 50 5.2.8 Place The game can be played easily through all common internet browsers by directly navigating to the link of the game Besides, in order to increase awareness of the users about the game, the following channel also should be used:  SEO: the site and content should be done properly so that it is search engine friendly to increase the rank in the result page of the search engine like Google, Bing, and Yahoo…  Link exchange program: link exchange program with the entertaining sites like trochoiviet.com, nhaccuatui.com… should be leveraged so that the game can reach a broader range of users  Channeling: channeling with the sites like gata.vn should also be explored This will also increase the source of revenue for the game  Social network: integrating with the social networks like Facebook, Google+, twitter is also a good choice Fan pages on those social networks should be created and managed Leveraging the user base there properly will definitely increase the site traffic  Game forum: advertising on those forums will definitely lead to value users to the game as this is one of the main sources users will find new game there Besides advertising, building a team to regularly post messages on various game forums and making friends with users inside the game forum community will be great It will build up high credit accounts on those forums With that, promotion can be easier done through that channel Besides, it will also be a good channel to get insight information on the game users  Internet café: although there is no official information calculates the number of users who access internet through internet café, it is estimated to be a big amount With 13,000 of internet café throughout the cities in Vietnam, this is also an attractive channel to get users to the game Special revenue sharing co-operation program with the owner of the internet café should be defined so that the owners can be game agent to distribute the game to the end users 51 5.2.9 Promotion Events inside the game need to be done regular to stimulate users play more as well as to let them know that they are taken care Besides the online event, offline activities also need to get organized so that users can have chances to have face to face meeting to know one another better This kind of offline activities is the key to glue the users together and tie their virtual life with their physical life Also, special bonus should be defined for the community leaders who build up strong community inside the game This will encourage the leaders to be more active in building up their community Besides, referral bonus should also be defined for users who introduce their friends and colleagues to join the game With those incentives, it will drive every member in the game to be an agent who helps to distribute it to a huge of users and support one another much better 5.2.10 Performance While generating revenue from the game is important, building the brand name and customer base is also an invaluable intangible asset The brand name and customer base can be used to promote new products or services in the future It can also be used to co-operate with other partners in distributing their products or services 5.2.11 Evaluation and control Specific target numbers of user base through specific channels as well as the revenue need to be set clearly in the plan Check points are scheduled in advance monthly and quarterly to review the performance and the effectiveness of the actions taken to achieve the strategy objectives so that proper adjustments can be made based on different situations Besides, in order to have decision being made properly, timely feedback information is very important Hence, marketing information system is needed to build up so that information is centralized and distributed to the BOD team continuously to assess the situation 52 5.2.12 Conclusion Diversifying the company product with this new social online game is a good strategic move According to Ansoff's matrix, diversification is a risky strategy in maintaining the growth of the company However, proper implementation of the strategy can result in attractive profit and reduce of portfolio risk With the accumulated capital, the existing skill team, it’s appropriate to move with that diversification strategy Moreover, the barrier from the policy in stopping approving game license also creates good opportunity for the company That barrier has caused no new game being imported from China, Korea game studios and also put burden to the entrance barrier to the companies who want to jump in the market Combining all those together, it creates a never better timing for the company to launch the new game 53 References Ivan (2010), “Th tr ng GameOnline VN: "B t v đ i" ph n l i”, www.baomoi.com Thanh Tr c (2011), “M nh tay v i game online b o l c”, nhipsongso.tuoitre.vn Akan, O., et al (2006), “Critical tactics for implementing Porter’s generic strategies”, Journal of Business Strategy, 27 (1), 43-53 Ansoff, I (1957), “Strategies for diversification”, Harvard Business Review, 35 (5), 113-124 Kotler, Philip (2011), Marketing Management Fourteen Edition, Pearson Education Publishing, United States of America Porter, Michael E (1998), Competitive strategy: Techniques for analyzing industries and competitors, Simon & Schuster Ltd, United States of America 54 Appendix 5.3 Online game survey Q1: What is your favorite online game genre? A) Strategic web game B) Wuxia game C) Simple casual game D) Sophisticated 3D game E) Social game Q2: What is the frequency of playing game in the following places (rating scale from (very rare) to (very often))? A) At internet café B) At home C) At office Q3: How much you spend on online game each month? A) Less than 50,000 VND B) 50,000 VND – 300,000 VND C) 300,000 VND – 500,000 VND D) 500,000 VND – 1,000,000 VND E) More than 1,000,000 VND Q4: How many hours you spend on playing online game per day? A) Less than hour B) – hour C) – hour D) – hour E) More than hour Q5: Apart from relax, what else are you looking for in an online game? 55 A) Make friends and build friendly relationship B) Earn money C) Nothing, just kill unused time D) Others (please specify ……………………………………………….) Q6: How many online games did you play last year (2011)? A) Less than B) – C) – D) – E) More than Q7: What’s the common reason you stop playing an online game? A) The game is bored B) The game is lag/disconnect frequently C) The graphics of the game is too bad D) The customer service of the game publisher is too bad E) No reason, just stop playing this game to move on trying another new game Q8: Where you find new online games to try playing? A) Through introduction from friends B) Through news, game magazines C) Through game forums D) Through introduction of the owner of the internet café E) Others (please specify ………………………………………………… ) Q9: If there is a new game introduced, are you likely to try it? A) Yes B) No Q10: Do your colleague play online game together with you? A) Yes 56 B) No Q11: Do your family play online game together with you? A) Yes B) No Q12: What’s your age? A) Below 18 B) 18 – 22 C) 23 – 30 D) 30 – 45 E) Above 45 Q13: What is the range of your monthly income (salary and/or money given by your parent)? A) Less than 4,000,000 VND B) 4,000,000 VND – 7,000,000 VND C) 7,000,000 VND – 10,000,000 VND D) 10,000,000 VND – 20,000,000 VND E) More than 20,000,000 VND Q14: What kind of phone you own? A) iPhone B) Android C) Other types of smartphone (Windows 8, Symbian…) D) Feature phone Q15: What’s your marriage status? A) single B) Married C) Married and have children D) Divorce 57 E) Widow Q16: What’s your occupation? A) Student B) Office worker C) Executive management (manager, director, VP, CEO) D) Free lancer E) Others (please specify: ………………………………………)