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Sacona Entertainment Report

Team #187

X-Culture 2018-2b

Name

Email

Country

Role / Primary Contribution

Alysea Richman

[email protected]

USA

Team Coordinator

Block 3

Summaries

Contributed throughout and helped to edit all sections

Jamal Abdullah Ali Al Maqhusi

[email protected]

Oman

Writer

Marketing

Promotion Channels

Message  

Jonathan Dix

[email protected]

USA

Researcher / Editor

Executive Summary

Industry and Competition Analysis

Market Success Criteria

Market Analysis

Maria Pushkaryova

[email protected]

Russia

Did not participate

Table of Contents

Executive Summary 5

Industry and Competition Analysis 7

Summary 7

Sacona Overview 7

SWOT Analysis 5

Gaming Industry 6

Competition 6

Market Success Criteria 8

Summary 8

Existing Market 8

Geography 8

Cultural Understanding 9

Economic Environment 9

Political Climate 9

Market Analysis 10

Summary 10

Market Selection 10

Market Analysis 10

Block 2: Marketing 12

Summary 12

Promotion Channels 12

Advertisement 13

Trade Shows 14

Displays 14

Special events and sponsorship 14

Social media 14

Message 15

Promotional Materials 15

Block 3: Operations Management 16

Summary 16

Exporting Mode 16

Potential Partners and Distributors 17

Logistics and Trade Regulations 18

Pricing and Service Support 18

References 20

Executive Summary

Industry and Competition:

Sacona has the software, hardware, skills, and research but lacks brand awareness

The gaming market is ready for new innovative experiences

Competition from established companies will be tough

Market Success Criteria:

Games must target their customers needs and preferences

The market must have a strong existing gaming presence, cultural acceptance, and a stable economy with disposable income

The target market must be at an ideal distance from India and strategic location

The political environment must be stable

In order for the product itself to be successful, Sacona must understand the market they

Market Analysis and Selection:

Asia-Pacific holds the largest gaming revenue share with the USA being second

Japan's market matches our criteria as their arcade/gaming industry is thriving

The Japanese economic and political environment is very stable

Marketing:

Operations Management:

Sacona should enter the market via direct export

Company should utilize either sea or air transport and optimize shipping space

Potential Partners and Distributors:

Alibaba.com, Round1, TAITO Corporation

Industry and Competition Analysis

Summary

Sacona has the software, hardware, skills, and research but lacks brand awareness

The gaming market is ready for new innovative experiences

Competition from established companies will be tough

Sacona Overview

Sacona is a relatively young gaming company that started in 2007. The produce an innovative array of video game machines that incorporate both physical and digital elements. Their focus shifted more to physical sports games and VR experiences in 2012. Now Sacona is ready to explore new markets outside India and increase their brand recognition world wide.

SWOT Analysis

Strengths

Existing game machine products that are already renowned

Solid Research & Development

Mechatronics skills  

Automation / Robotics skills   

Utilization of 3D / 4D Motion simulators  

Weaknesses

Lack of brand awareness outside India

Small market penetration in foreign markets

Opportunities

Partnerships

Expanding to new markets in Asia

Partnering with established brands

Threats

Game market shifts to mobile and home consoles

Heavy competition with long-established companies

Gaming Industry

The gaming industry is a massive multi-billion dollar worldwide market that continues to expand. As technology and innovation evolve, the gamers' interests also shift. Games are played by not only the younger generations but also have massive followings of adult gamers who push the industry to constantly innovate. Devices such as mobile phones, tablets, computers, and consoles increase the reach and accessibility of games. They cannot, however, match the level of immersion that large 3D/4D motion simulators and virtual reality have to offer.

Technological innovation has opened the doors to a resurging market for large, immersive gaming experiences that offer a much richer engagement for their players. Companies like Sacona offer the hardware and software that allows these experiences to utilize both the physical and digital. By taking advantage of this refined technology, they are able to transcend barriers between the real world and the gaming world. These new 4D or VR game experiences are capable of simulating motion, temperature change, and haptic feedback in a way users cannot experience with mobile or home games (Robin 2018). Sacona already has products that offer these experiences, and they have the research, development, and skills to create many more.

Competition

Sacona has three main competitors in the arcade gaming market: Sega, Capcom, and Bandai Namco.

Each of these companies is strongly established in the industry and well known. They have a much longer history in the gaming world and as such are very recognizable brands. Since the Sacona brand is much less known, this will be their main weakness against these solid companies. Sacona's main strength will be differentiation and flexibility. They have the ability to create a new and fresh experience that pushes the limits of their technology.

Market Success Criteria

Summary

Games must target their customers needs and preferences

The market must have a strong existing gaming presence, cultural acceptance, and a stable economy with disposable income

The target market must be at an ideal distance from India and strategic location

The political environment must be stable

In order for the product itself to be successful, Sacona must understand the market they are entering. They must consider the needs and preferences of their customers.

Existing Market

The target region should have a pre-established gaming market with a sizable market cap to support Sacona's entrance. Sacona will be offering new products to customers who already love and pay for game experiences. Arcades have diminished in popularity over the last few years. We will need to find a region where arcades are still popular and thriving.

Geography

When considering how to establish a presence in a new market, location is very important. The target country will need to be close enough to India that executives and managers can conduct business without unreasonable travel time and expense. We will also want to consider the shipping costs between Sacona's headquarters in India and the target market. Too great or complex of a shipping route can cause hinder their ability to sell effectively.

Cultural Understanding

Culture is a vital part of every society. Sacona will need a market that is culturally similar to their own and accepting of games. Sacona will also need to be able to adapt to the customer's needs and cultural expectations. The culture must also be willing to conduct business with India.

Economic Environment

Economic factors are crucial in choosing a market. The country must be able to sustain Sacona's business model by its citizens having a good disposable income per capita. We will also need to consider trade negotiations. The country must be able to fairly import Sacona's products and services without heavy taxes or risk of being denied trading.

Political Climate

Political stability is also important when considering a region. Sudden changes in power or political agendas can be deadly to businesses.

Market Analysis

Summary

Asia-Pacific holds the largest gaming revenue share with the USA being second

Japan's market matches our criteria as their arcade/gaming industry is thriving

The Japanese economic and political environment is very stable

Market Selection

The gaming market's worldwide revenue reached $137.9 billion (USD) in 2018. Asia-Pacific region is the largest region accounting for $71.4 billion (USD), approximately 52% of the worldwide revenue, and is expected to grow by 16.8% year-over-year. With revenues of $32.7 billion (USD), North America is the second-largest region (Wijman, 2018). Asia's high gaming revenues led us to consider this region first.

China, South Korea, Japan, and the United States were on our shortlist due to their market share and economic weight. Japan turned out to be our best candidate out of all them based on our analysis below.

Market Analysis

Japan's gaming market is massive. Their culture is very pro-gaming with numerous companies. We see by Japan's extensive history of gaming with their companies like Nintendo, Sony, Sega, Capcom, and many more show that Japanese culture is very pro-gaming.

Japan loves arcades too. They dominate the market and are culturally encouraged places to visit and hang out. Arcades remained popular in the past 20 years when other countries saw a decline in customers. According to Kotaku, “Japan Amusement Industry Association says there are 4,856 registered arcades across the country. There also another estimated 9,000 locales, each having under fifty machines” (Ashcraft 2017). The arcade market in Japan is already thriving, which means heavy competition but also lots of opportunities. The United States, in comparison, has seen much more difficulty maintaining its arcade market has had many other parts of the world (Orland 2012). It takes innovation and cultural interest to maintain certain markets and that is what Japan can do.

Geographically, Japan is not the most accessible for India, but both nations have existing routes to each other, being very important world economies. They are still part of the same continental region. Existing trade agreements also factored into our decision. Both India and Japan are trade partners through the Free Trade Agreement (FTA) and Economic Partnership Agreement (EPA) (Ministry of Foreign Affairs of Japan 2018). This allows better trade stability for Sacona to export their goods and services to Japan.

Politically, Japan is very stable. Their culture exudes order and organization. Even during worldwide political upheaval, Japan remains steady. Japan was even voted No. 5 Best Country of 2017 by U.S. News due to their consistency among other high praises (McPhillips 2017). With continued strong economic growth and stability, Japan has proven itself economically reliable (CNBC 2018).

Marketing

Summary

 

Promotion Channels

The biggest challenge in marketing Sacona products and games is building brand awareness and engaging with customers. The most efficient way to enter the Japanese market is to use a mix of promotional methods. Japan has a very advanced advertising market. Sacona should invest in various media such as trade shows, special events, magazine and  newspaper ads, social media, and Japanese cultural influencers.

   

Advertisement

Television advertisements will be the most expensive. They can use Japanese influencers and opinion leaders to promote popularity for the Sacona brand. This mix of television and Japanese celebrities can send a message that reaches all geographically dispersed buyers. Also, magazines and newspapers can be useful in promoting Sacona products. We can target magazine audiences for children, teenagers, and young adults. Sacona can use regional and local newspapers and television stations that may less cost and it can cover specific regions or demographic segments.

Trade Shows

Sacona should participate in trade shows to be near to its customer and better understand buyer response to their products and brand. By choosing entertainment epicenters, they can effectively reach the right demographic, understand their buyers' preference, and develop customer relationships. There are many places in Japan can use, such as J-World Tokyo  in Sunshine City. Its receives over 30,000,000 visitors a year. (SunshineCity, 2018)Also Odaiba Station had big shopping malls like Aqua City, Diver City and Lala Port Toyosu. Also, Tokyo Big Sight referred to as capital of Japan International Exhibition Center, capital of Japan huge Sight is Japan's largest exhibition and convention center and one amongst the bay islands' boldest subject area creations. (JapanGuide, 2018). These places are very lucrative for trade shows.

 Special events and sponsorship

Special events and sponsorships can boost Sacona's to awareness and relationships with other companies. They can host special events to show and promote their products and the Sacona brand. These events might include competitions where people can win prizes.

Social media

Promotion in social media like Facebook, Twitter, and Instagram can be done through increasing their presence and directly engaging the audience. Also, social media can further spread awareness by partnering with Japanese influencers. Facebook advertising prices have a median value per click (CPC) of $1.86, however will be over $5.00 betting on factors from ad quality to competition. whereas the typical tiny business advertising on Facebook spends around $500 to $1,500 per month. (Main, 2018). While the typical CPC on Instagram is around $0.50 – $1.00. you may pay additional in extremely competitive industries. (KarolaKarlson, 2018). In twitter the average price for a promoted tweet is around $1.35 per engagement. (ThriveHive,2017) By social media promotion you can target segment of audience and customer by geographic places and determine how much advertisement appearance

Message

When Sacona enters the Japanese market, they should push for a big marketing campaign by participating in a tradeshow or hosting a large event with consumers and audiences directly. Active engagement with their target consumers from children to young adults is important through events and social media platforms. In addition, they will want to demo the Sacona gaming machines that feature all their best innovation with new innovative technologies. They need to show their products utilize advanced technology while still being comfortable and intuitive. Sending this message to Japanese audiences shows their interest in delivering products Japanese people will love. They will also need to convey the message that Sacona encourages feedback from their customers and the products to fit their desires. Our idea for Sacona's slogan says "Sacona, Unlimited pleasure". This can start their marketing campaign in Japan.

Promotional Materials

Operations Management

Summary

Sacona has chosen to investigate options for a strategic alliance with another firm. A strategic alliance is defined as “a relationship whereby two or more entities cooperate (but do not form a separate company) to achieve the strategic goals of each.” (Wild&Wild,332). This type of investment entry mode can occur between a company and its buyers, sellers and competitors. In the case of Sacona, the firm will be entering a strategic alliance with another firm in Japan to distribute Sacona's product in that particular market.  Our team has determined the optimal export mode, identified potential partners and distributors, and evaluated pricing, logistics and regulations involved in the case.

Entry Mode: Direct Exportation to retain intellectual property and manufacturing processes

Shipment via sea or air

We recommend Sacona provide services and repair for partners after delivery

Exporting Mode

The team recommends that Sacona enter a new market by business-to-business sales(b2b). The best way for Sacona to engage the market is to strategically align themselves with other firms to promote and place their product. By exporting directly to suppliers and firms in Japan, Sacona can have more control over interactions with the market. Below is an analysis of the teams top methods for exporting to Japanese firms.

Entry Mode

Strengths

Weaknesses

Direct Export

Allows Sacona to better retain their intellectual property

Allows firm to retain their own manufacturing processes

Potentially uses more resources

Subjects firm to foreign regulations

Indirect Export

Allows the firm to focus less on exports and more on production and innovation

Provides an easier way to broach an unfamiliar market

Lessens communication with buyers

Licensing

Reduces liability

Risks loss of intellectual property

Potential Partners and Distributors

ROUND 1 ENTERTAINMENT

Round1 Entertainment is a global firm that is based in Osaka, Japan. The company has multiple arcade chains throughout Japan and has successfully branched out into other foreign markets, such as the United States. A strategic alliance with Round1 would place Sacona's products into the chain stores and potentially into other markets as well.

    

   Above are pictures taken in a Round1 arcade in Hiroshima, Japan. (JapanTravel)

ALIBABA.COM

Alibaba.com is a worldwide distributor for arcade game suppliers and manufacturers. While the company is based out of China, it is a global distributor and can help bring Sacona's products to other markets as well.

   

     Photos obtained from alibaba.com

TAITO Corporation

TAITO Corporation is one of Japan's top arcade gaming firms. Their partnership policies seem to help protect intellectual property as well as consumer interests.

Logistics and Trade Regulations

Sacona manufacturers in Bangalore, India. There are two ways for shipment between India and Japan, air and sea. The typical size for a game system is 289 cm x 189 cm x 198 cm and 250kg. (Taras, 2016). This requires freight shipment containers to be large enough to contain the devices yet also maximize space used.

As previously stated, both India and Japan are trade partners through the Free Trade Agreement (FTA) and Economic Partnership Agreement (EPA) (Ministry of Foreign Affairs of Japan 2018). This allows better trade stability for Sacona to export their goods and services to Japan.

Sacona must also be aware of import regulations to Japan. Currently, “Most goods do not require an import licence and can be freely imported into Japan. Import licences are required for certain goods, including hazardous materials, animals, plants, perishables, and in some cases articles of high value.” (HKTDC,2018). Japan also has a strict ban on gambling, which is good for Sacona because the arcade games are purely for amusement.

As of January 4, 2018, there is no tariff rate for video game consoles and machines, funfair articles, automatic bowling machines, and games operated by coins. (JapanCustoms, 2018)

Pricing and Service Support

It is usual for most gaming systems to provide service support after delivery. This typically occurs during the warranty period but it can also be contracted out. Other gaming companies add a warranty as an additional fee not to be included with the price of the device or system. However, due to the uniqueness of Sacona's products, it is recommended that they provide service support themselves for their partners and customers. Due to distance barriers, Japanese firms can also hire an outside source to repair or service the machines, though this is not recommended due to the uniqueness of Sacona's products. Japanese service technicians were difficult to find as well as pricing for products, services and repairs.

References

Alibaba. (n.d.). Japan Arcade Games. Retrieved November 16, 2018, from https://www.alibaba.com/showroom/japan-arcade-games.html

Ashcraft, B. (2017, February 15). Why Arcades Haven't Died In Japan. Retrieved November 16, 2018, from https://kotaku.com/why-arcades-havent-died-in-japan-1792338461

CNBC. (2018, September 10). Japan posts fastest economic growth since 2016 in the second quarter. Retrieved November 28, 2018, from https://www.cnbc.com/2018/09/10/japan-posts-fastest-economic-growth-since-2016-in-the-second-quarter-.html

HKTDC Research. (2018, June 22). Trade Regulations of Japan. Retrieved November 29, 2018, from http://hong-kong-economy-research.hktdc.com/business-news/article/Small-Business-Resources/Trade-Regulations-of-Japan/sbr/en/1/1X000000/1X006N03.htm

Japan Customs. (2018, April 1). Japan's Tariff Schedule. Retrieved November 29, 2018, from http://www.customs.go.jp/english/tariff/2018_4/index.htm

JapanTravel.com. (n.d.). Round 1 Amusement Center - Hiroshima - Japan Travel. Retrieved November 16, 2018, from https://en.japantravel.com/hiroshima/round-1-amusement-center/3566

McPhillips, D. (2017, March 16). Japan's Stability Is Both Strength and Liability. Retrieved November 28, 2018, from https://www.usnews.com/news/best-countries/articles/2017-03-16/japans-stability-is-both-strength-and-liability

Ministry of Foreign Affairs of Japan. (2018, November 19). Free Trade Agreement (FTA) and Economic Partnership Agreement (EPA). Retrieved November 28, 2018, from https://www.mofa.go.jp/policy/economy/fta/index.html

Orland, K. (2012, April 03). What ever happened to the American arcade? Retrieved November 26, 2018, from https://arstechnica.com/gaming/2012/04/what-ever-happened-to-the-american-arcade/

Robin, R. (2018, March 31). Why arcades are going to get a lot more fun in this century. Retrieved November 28, 2018, from https://medium.com/@ROUROUROBIN/why-arcades-are- going-to-get-a-lot-more-fun-in-this-century-ccdc2a100ce4

Taito Corporation. (n.d.). Taito Corporation | Arcade. Retrieved November 29, 2018, from https://www.taito.com/gc

Taras, V. (2016, September 22). Sacona Webinar. Retrieved November 20, 2018, from https://www.youtube.com/watch?v=3j4Z_HUhNUo

Wijman, T. (2018, April 30). Global Games Market Revenues 2018 | Per Region & Segment. Retrieved November 18, 2018, from https://newzoo.com/insights/articles/global- games-market-reaches-137-9-billion-in-2018-mobile-games-take-half/

Wild, J. J., & Wild, K. L. (2016). International Business: The Challenges of Globalization, Global Edition. Harlow: Pearson.

Find quality Manufacturers, Suppliers, Exporters, Importers, Buyers, Wholesalers, Products and Trade Leads from our award-winning International Trade Site. Import & Export on alibaba.com. (n.d.). Retrieved from http://www.alibaba.com/

Odaiba• Town/Neighborhood in Tokyo. (n.d.). Retrieved from https://www.japan-guide.com/e/e3008.html

Management Team. (n.d.). Retrieved from http://www.sacona.com/about.html

Something fun for everyone. Sunshine City. (n.d.). Retrieved from https://www.sunshinecity-global.com/en/facility/jworld/

Nisreen, Fabregas, K., Dan, Marsan, J., Aland, M., & Kumar, R. (2018, November 13). Facebook Advertising Cost by Industry 2018. Retrieved from https://fitsmallbusiness.com/how-much-does-facebook-advertising-cost/

Instagram Ads Cost in 2018 – How to Pay Less And Get More Results. (2018, June 07). Retrieved from https://karolakarlson.com/instagram-ads-cost-and-bidding/

By ThriveHive, P. (2017, November 01). How Much Does it Cost to Advertise on Twitter? Retrieved from https://thrivehive.com/how-much-does-it-cost-to-advertise-on-twitter/

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