The world of video games is fast growing with GameStop being one of the largest video games retailers. The company specializes in both old and new software and hardware, accessories that can be used to play games in PCs, game consoles, action figure, DVDs, strategies guide and other gaming merchandise. To ensure that the corporation retains its status in the video games industry, it is appropriate to do a SWOT analysis with the help of Michael Porter’s Five-Force Industry analysis will largely help the management appraise itself and so as to understand how the company should move forward (Porter, 2008).

 

The major strength of the company is that it is the leading retailer of video games with a strong growth on the top line and also a low debt burden which is favorable to the company. However, its key weakness is that its main concentration is on the supplier and the geography but with the gaming market booming and growing daily, creates a vast opportunity for GameStop. The company’s storage is also growing but suffers greatly to the threats of increased piracy and intense competition with other video game retailers (Porter, 2008).

 

問題1—Question one
 

With the increased growth of the Gaming industry, GameStop had to come up with the most generic competitive strategy available. The main aim of the company was to ensure that the company has an increased advantage over other rival companies. Their strategy is to beat the competition out of the Video Game industry through lowering the cost of their products hence, drawing the attention of their target audience. They have also lowered their production price and produce different products compared to those of their competitors (Chatterjee & Yee, 2012).

 

The target segment for GameStop is divided into three: the devoted gamers, social gamers and casual gamers. The devoted gamers, who are 41% of the targeted customer, play video games for long periods for up to seven days in a week. They prefer categories like action games, role playing games, sports and stimulation games. They mostly play using many consoles and prefer new games and hardware. The social gamers represent 31% and play video games for short periods of like four or five times a week. They mostly play sport and fighting games categories and use either one or two consoles. The last segment is the casual gamers who represent 28% of gamers and play video games twice a week for short periods with a preference of puzzles and strategic games and use only a single console.

 

Just like the marketing segments, their target customers are also divided into three: the electronic game enthusiasts, value oriented and seasonal gift givers. The electronic game enthusiasts lie in the devoted segment since they do not care about the price and look for specialized products (Porter, 2008). The value oriented gamers, lie in the casual segment and prefer used games and other promotions available in the GameStop stores. Seasonal Gift Givers prefer new games and are most common during peak seasons due to the numerous promotions.

 

With such a diverse target customers, GameStop has had to diversify their activities to ensure that every customer acquires what they need. They allow customers to trade in games and consoles. They also sell new and old games in retail and online with their main target being international gamers hence, the increased growth of retail shops all over Europe, Mexico and South Korea. Through identifying their preferred game categories, the company is sure of adequately satisfying its gamers’ gaming needs (Chatterjee & Yee, 2012).

 

問題2—Question two
 

Managers of GameStop have ensured that they are different from their competition by coming up with a unique value chain that suits them best. Having retailer shops nationally is one of the main differences from their competitors as this retail shops ensure that they offer a wider game selection both new and old. In addition, GameStop’s trade-in process allows their customers to exchange their games and consoles for others or money and are inspected either through diagnostic computers for consoles or through looking for scratches for games. Their monetary price is lower than the trade-in price and the customers accept it in form of cash and thus, keeping them ahead of their competitors (Chatterjee & Yee, 2012). Trade-ins are common in times when gamers are awaiting the release of a new software or game. While this is beneficial for the customers as they can use the trade-in credit to purchase other systems and games, it also benefits the corporation in that it is a source of revenue during off seasons.#p#分頁標(biāo)題#e#

 

Moreover, GameStop had employed knowledgeable employees who help the customers during their visits to the retail shops. Before hiring the employees, their knowledge on games and consoles is tested and they are allowed to take games home so as to keep them updated on the products. The employees also attract devoted gamers because they understand their needs and have the knowledge of the most recent system. However, with video games soon shifting to online action, GameStop have set up online rental and purchase sites so as to move with this new growing trend. In rental sites, customers are allowed to rent up to five games at a time and can receive a new game when they return the old one.

 

問題3—Question three
 

The video gaming industry is rapidly growing hence the number of new entries and competition is increasing. Some of GameStop’s key competitors are the Best Buy Co., Inc. which operates in USA, Europe, Mexico and Canada, Barnes and Noble and Wal-Mart stores, a worldwide operator of retail shops. Nevertheless, in trying to be ahead of their competition, GameStop has applied different strategies such as lowering their product costs, which has drawn a reasonable attention for the company because though the price is lower than the other companies, the quality is still high. The other strategy is through reducing the cost of production. Instead of creating one expensive mega hit Video game they have opted to produce numerous games that are hits like the Sudoku (Montgomery, 2012).

 

They have also made different products that cannot be imitated by their competitors as evident when they first invented the right-left-top-bottom-button control. Another strategy that GameStop uses to stay ahead of competition is through segmenting their marketing through targeting a larger mass by producing childish game for kids, educational games that can target the parents and others targeting different customers. During trade-ins, customers acquire credit that they can store and use for buying more games in the future. This model ensures that with the growing digital trend, the customers will be grounded to GameStop retailers (Montgomery, 2012). This is another way the company had used to keep the competitors out.

 

Video gaming world and technology is fast growing and hence this changes have to be improved over time so as to ensure that the company holds its part in the Gaming investment. Keeping the quality of the high ensures that the competitors will be kept out and there will be no new entry to the gaming world (Chatterjee & Yee, 2012).

 

問題4—Question four
 

GameStop started as a small retailer for software called Baggage and later merged with many other companies with the greatest merger being the EB Games in 2005. The merger between the two companies had a huge impact on the number of retailer centres they had. The retailers became larger than those of their competitors and had control of around 25% of the whole gaming world market.

 

Nonetheless, GameStop believes that the next generation of gaming systems will revolve around the digital world and therefore, they are taking a huge advantage of the situation using this as an opportunity to acquire more customers. Through online retailer shops, customers can download different games and the credit gotten during trade-ins can be used to purchase games either online or physically in stores. They have acquired a website, Kongregate.com, and an online distributer company, impulse, to help them acquire new customers as well as buying Spawn Labs, a company that will allow customers to stream purchased games between different devices (Chatterjee & Yee, 2012)..

 

To ensure that the employees are up to date with the upcoming technologies, GameStop allows them to take new games home to familiarise with them for four days. This ensures that they have the available knowledge needed while dealing with the customers.