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 1
Abbreviations 2
Chapter 1: Introduction 3
1.1 Rational of the study 4
1.2 Statement of the problem 4
1.3 Research questions and objectives 4
1.3.1 Research objectives 4
1.3.2 Research questions 4
1.4 Research approaches 5
1.4.1 Qualitative research 5
1.4.2 Quantitative research 6
1.5 Scope of the study 6
1.6 Structure of the study 6
1.7 Significance of the study 7
Chapter 2: Literature review 8
2.1 Porter’s generic framework theories 9
2.1.1 Cost leadership strategy 9

2.1.2 Differentiation strategy 10
2.1.3 Focus strategy 11
2.2 Ansoff’s matrix 11
2.2.1 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: External and internal environment 18
3.1 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: Proposed Marketing Strategy 43
5.1 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

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List of figures
Figure 2-1: Porter's generic framework 9
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
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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

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Chapter 1: Introduction
1. RATIONAL OF THE STUDY

2. STATEMENT OF THE PROBLEM
3. RESEARCH QUESTIONS AND OBJECTIVES
4. RESEARCH APPROACHES
5. SCOPE OF THE STUDY
6. STRUCTURE OF THE STUDY
7. SIGNIFICANCE OF THE STUDY
4



1.1 Rational of the study
Empire Corp. (name disguised) was established around 3 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 3 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:
1. To analyze the current situation of the company and the market.
2. To identify the target segments which the game should focus on so that.
3. To identify the positioning of the new game as well as its points of
differentiation.
4. 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:
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1. What segments should the game target to?
2. What should be the core values the game provides?
3. What should be the positioning point of the game?

4. What are the differentiation points of the game?
5. What marketing mix should the game apply?
1.4 Research approaches
1.4.1 Qualitative research
As the existing game has shown to be quite successful, a focus group research is
done on the representative users to collect the attributes contributing to its
success so that we can leverage those to the new game. A group of 15 members
are gathered in which 10 from the community leaders inside the game
communities and 5 from the most active users. The interview is done to expose
the information on:
 How they knew the game
 The interesting characteristics of the game which has been keeping them
the users of the game.
 The attributes motivate them to be the community leaders and the active
users.
The interview is done with the following questions:
1. How do you know about the game?
2. How long have you been playing the game?
3. How much time and money you spend on the game?
4. What makes you spend much effort to build the community around you?
5. Who do you invite to your community?
6. Are there any comments, suggestions for the company?
7. Are you playing any other game?
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1.4.2 Quantitative research
This is done through survey on the top leading game forums in Vietnam with the
sample size of 1113 gamers:

www.vn-zoom.com, forum.gamevn.com,
www.go.vn/diendan, diendan.zing.vn, fgt.vnexpress.net, forum.playpark.vn. It is
expected through the survey to understand the most attractive attributes of the
game that the potential game users expect so that proper strategy can be
proposed to fit the needs of the users as well as to proper way to reach them. To
increase the response rate of the survey, the forum administrators and the high
reputation forum users are contacted to post the survey onto the forum.
1.5 Scope of the study
The scope of the study is to analyze the market, the consumers, the competitors
as well as the company itself so that proper marketing strategy can be proposed to
launch the game successfully. The detail marketing plans as well as the financial
issue are not covered in this study.
1.6 Structure of the study
This study is structured into five chapters as following
CHAPTER 1: INTRODUCTION
This chapter provides an overview on the purpose “WHY” the study is conducted,
“WHAT” is the problem that needs to be addressed, “HOW” the problem should be
addressed as well as the scope and the contribution of the study.
CHAPTER 2: LITERATURE REVIEW
This chapter covers the literature review related to the study. It mentions the
theories, concepts that are useful in analyzing the situation as well as in proposing
the suitable marketing strategy in the study.
CHAPTER 3: EXTERNAL AND INTERNAL ENVIRONMENT
This chapter analyzes the secondary data on the market trend, users’ attributes
and competitors. It also presents the overview information of the Empire Corp and
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its existing marketing mix per the updated 4Ps: People, Processes, Program and

Performance.
CHAPTER 4: DATA ANALYSIS AND FINDINGS
This chapter analyzes the primary data collected through the focus group interview
and the survey research and also present the findings based on the analysis which
used to solve the research objectives and questions described in chapter 1.
CHAPTER 5: PROPOSED MARKETING STRATEGY
This chapter analyzes the SWOT of the Empire Corp. Based on that and the data
analysis and findings in chapter 4 as well as the market trend in chapter 3, the
proposed marketing strategy is presented which identify the target segments and
the marketing mix for the new game.
1.7 Significance of the study
The study provides great value to the company in driving the new product into a
proper path so that the target revenue can be achieved and the growth rate of the
company can be sustained in the upcoming years.


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Chapter 2: Literature review
1. PORTER’S GENERIC FRAMEWORK THEORIES

2. ANSOFF’S MATRIX
3. MARKETING MIX
4. CUSTOMER PARTICIPATION AND PERSONALIZATION
5. PRODUCT LEVELS: THE CUSTOMER VALUE HIERARCHY
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2.1 Porter’s generic framework theories
According to Porter (1998), a company can use Porter’s generic framework
theories to identify its optimal position in the industry. The one places itself in the
correct optimal position would definitely generate more profits than ones who are
not. A company should analyze its strength and weakness to identify its
competitive advantages. Michael Porter argued that a company’s strength
ultimately could be placed into two categories: cost advantage or differentiation.
Application of those strengths in either a broad (industry wide) or narrow (market
segment) scope results in three generic strategies: Cost leadership, differentiation
and focus.

Figure 2-1: Porter's generic framework
2.1.1 Cost leadership strategy
Cost leadership means that the company wanting to adopt this strategy is trying to
be the producer with the lowest production cost in an industry. The results of such
a strategy is that the company who try to be the cost leader sells products at an
industry average to earn higher profits than competitors or goes below the industry
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average to steal market shares from rivals. If a company has sufficient strength to
go below competitor products in price, this can be of advantage in order to grab
market shares from the opposed, weaker company. This strategy usually targets a
broad market, which in my view makes sense, as one need to sell higher volumes
in order to maintain a healthy level of profits.
One of the helping factors playing into a successful cost leadership strategy is that
the market one is selling into should have a relatively high level of price sensitivity.
This is because greater price sensitivity increases the advantage a cost leader has

over other firms.
2.1.2 Differentiation strategy
A differentiation strategy is when the company develops a product or service that
offers unique attributes that are valued by customers and that customers perceive
to be better than or different from the product of the competition. The uniqueness
of the product allows for the company to charge a higher price. The higher price
also reflects the fact that with a differentiation strategy the customer base will
usually be smaller and the production costs might be higher. Therefore, some of
the costs are passed on to the customers.
In order to succeed with a differentiation strategy there is a need for a unique
internal strength within the company. This can be a strong sales force that can
communicate the strengths of the product, access to leading research and
development teams and good corporate reputation.
It was found that companies that were successful in their differentiation strategy
had three tactics which were significantly related to organizational performance.
These included innovation in marketing technology and methods, fostering
innovation and creativity and focus on building high market shares. In order to
succeed with a differentiation strategy a company needs to be able to be new and
creative both in terms of understanding customer needs and connecting with their
customer in order to differentiate themselves from the competition and to create
better customer value.
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2.1.3 Focus strategy
A focus strategy is concentrated on a narrow market segment where the company
tries to achieve either cost advantage or differentiation. According to Porter, a
focus strategy means that the needs of the group can be better serviced. This
often results in a higher degree of customer loyalty, which gives the companies

successfully using a focus strategy an advantage in that it discourages direct
competition.
Akan et al. (2006) identified four tactics that appear to be critical for organizations
adopting a focus/low cost strategy. These are providing outstanding customer
service, improving operational efficiency, controlling the quality of products or
services and extensive training of front-line personnel. From this I found that these
changes are actions or focuses that put emphasis on changes internally in the
organization to improve the offering to the customer. It seems to me to be changes
that are geared towards making a cohesive and holistic offering of a particular kind
that serves the customer need.
From the same paper as mentioned above (Akan et al., 2006), two significant
tactics for success in a focus/differentiation strategy is mentioned. These are
producing specialty products and services and producing products or services for
high price market segments. The findings from this is that in order to succeed with
a focus/differentiation strategy the company needs to know their customers
particularly well as selling in this segment often means that the product range is
narrow but of high quality or tailored to a specific taste or need. Firms that succeed
in a focus strategy are able to tailor a broad range of product development
strengths to a relatively narrow market segment that they know very well.
2.2 Ansoff’s matrix
The Ansoff Product-Market Growth Matrix by Igor Ansoff (1957) portrays
alternative corporate growth strategies. It focuses on the company’s present and
potential products and markets. The matrix is meant as help for companies to
understand what actions need to be carried out given current performance.
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Figure 2-2: Ansoff's matrix

As an example of a suitable scenario for implementation on Ansoff’s matrix could
be a company that is in need of a strategic change in order to maintain growth. In
relation to Ansoff’s matrix this means that a company need at some point in their
growth phase to make a decision as to what products or services they should offer
in which markets.
2.2.1 Market penetration
The market penetration strategy is said to be the least risky since it uses and
builds upon the company’s existing resources and capabilities. If the market is
growing, a company maintaining market share can experience growth. If for
example, competitors reach capacity limits; this should be an opportunity for other
companies to take market shares. It is important to point out that market
penetration has its limits, because of market saturation. If the market saturates,
companies must use another strategy in order to continue their growth.
2.2.2 Market development
A market development strategy means that the company moves beyond its
immediate customer base towards attracting new customers for its existing
products. One aspect needs to take into account when considering a market
development strategy are barriers to entry. These barriers to entry to the market
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might have implications for the short and long term contribution to overall
profitability.
2.2.3 Product development
A product development strategy retains the present mission and develops
products that have new and different characteristics such as improving the
performance of the mission. It is argued that this strategy will be most effective if
the company’s strengths are related to its specific customers rather than to the
specific product itself. The reasons for wanting to implement a product

development strategy can be to utilize excess production capacity, counter
competitive entry, maintain the company’s reputation as a product innovator,
exploit new technology, and to protect overall market share. One appropriate step
in developing a new product to its existing customers could be to identify a
customer need either by looking at competition or discovering a need-opportunity.
This strategy is said to carry more risk than attempting to increase market share
for example.
2.2.4 Diversification
Diversification strategy means that moving simultaneously into new products and
new markets. It is the most risky strategy of the four. However, with careful
selection of the right kind of business considerable improvements in profitability
can be achieved. It is important to note that diversification may be into related and
unrelated areas. Related diversification may be in the form of backward, forward,
and horizontal integration. A diversification strategy is likely more suitable for well-
established, capital strong companies. The advantages of diversification include
the potential to gain a foothold in an attractive industry and the reduction of overall
business portfolio risk.
2.3 Marketing mix
The traditional marketing mix is the following 4Ps: product, price, place and
promotion.
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 Product: the product is the physical product or service offered to the
consumer. In the case of physical products, it also refers to any services or
conveniences that are part of the offering.
 Price: the price variable of the marketing mix refers to an organization’s
pricing policies which are used to define pricing models and to set prices for
products and services. Company must consider its service level before

setting the pricing strategy. Offering very low prices may lead to low level of
customer service while it may not acceptable for customers who have poor
support and a bad experience may stop them using the service again.
Company must think about establishing its brand through products and
quality of service rather than having the lowest prices.
 Place: the place element of the marketing mix refers to how the product is
distributed to customers. Typically, for offline channels, the aim of Place is
to maximize the reach of distribution to achieve widespread availability of
products while minimizing the costs of inventory, transport and storage. In
an online context, thanks to the ease of navigating from one site to another
through hyperlink, the scope of “Place” is less clear since Place also relates
to Promotion and Partnership. Successful retailers are those that maximize
their representation or visibility on 3
rd
party sites which are used by their
target audiences. These 3
rd
party sites will include search engines, online
portals about mobile phones and product comparison sites.
 Promotion: the promotion element of the marketing mix refers to how
marketing communications are used to inform customers and other
stakeholders about an organization and its products.
However, given the breadth, complexity, and richness of marketing, Kotler (2011)
thinks that clearly these four Ps are not the whole story anymore. If we update
them to reflect the holistic marketing concept, we arrive at a more representative
set that encompasses modern marketing realities: people, processes, programs,
and performance
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 People reflect, in part, internal marketing and the fact that employees are
critical to marketing success. Marketing will only be as good as the people
inside the organization. It also reflects the fact that marketers must view
consumers as people to understand their lives more broadly and not just as
they shop for and consume products and services.
 Processes reflect all the creativity, discipline, and structure brought to
marketing management. Marketers must avoid ad hoc planning and
decision making and ensure that state-of-the-art marketing ideas and
concepts play an appropriate role in all they do. Only by instituting the right
set of processes to guide activities and programs can a firm engage in
mutually beneficial long-term relationships. Another important set of
processes guides the firm in imaginatively generating insights and
breakthrough products, services, and marketing activities.
 Programs reflect all the firm’s consumer-directed activities. It encompasses
the old four Ps as well as a range of other marketing activities that might not
fit as neatly into the old view of marketing. Regardless of whether they are
online or offline, traditional or nontraditional, these activities must be
integrated such that their whole is greater than the sum of their parts and
they accomplish multiple objectives for the firm.
 Performance is defined as capturing the range of possible outcome
measures that have financial and nonfinancial implications (profitability as
well as brand and customer equity), and implications beyond the company
itself (social responsibility, legal, ethical, and community related).
2.4 Customer participation and personalization
Kotler (2011) also points out in the modern marketing realities that consumers
have found an amplified voice to influence peer and public opinion. In recognition,
companies are inviting them to participate in designing and even marketing
offerings to heighten their sense of connection and ownership. Consumers see
their favorite companies as workshops from which they can draw out the offerings

they want.
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Besides, thanks to advances in factory customization, computer technology, and
database marketing software, companies can make and sell individually
differentiated goods.
2.5 Product levels: the customer-value hierarchy
In planning its market offering, according to Kotler (2011), the marketer needs to
address five product levels. Each level adds more customer value, and the five
constitute a customer-value hierarchy.

Figure 2-3: Product levels
 The fundamental level is the core benefit: the service or benefit the
customer is really buying. A hotel guest is buying rest and sleep. The
purchaser of a drill is buying holes. Marketers must see themselves as
benefit providers.
 At the second level, the marketer must turn the core benefit into a basic
product. Thus a hotel room includes a bed, bathroom, towels, desk,
dresser, and closet.
 At the third level, the marketer prepares an expected product, a set of
attributes and conditions buyers normally expect when they purchase this
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product. Hotel guests minimally expect a clean bed, fresh towels, working
lamps, and a relative degree of quiet.
 At the fourth level, the marketer prepares an augmented product that

exceeds customer expectations. In developed countries, brand positioning
and competition take place at this level. In developing and emerging
markets such as India and Brazil, however, competition takes place mostly
at the expected product level.
 At the fifth level stands the potential product, which encompasses all the
possible augmentations and transformations the product or offering might
undergo in the future. Here is where companies search for new ways to
satisfy customers and distinguish their offering.


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Chapter 3: External and internal
environment
1 EXTERNAL ENVIRONMENT
1.1 Types of online games
1.2 Market overview
1.3 Competitors
1.4 Barriers of the industry

2 INTERNAL ENVIRONMENT
2.1 Empire Corp overview
2.2 People
2.3 Processes
2.4 Program
2.5 Performance
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3.1 External environment
3.1.1 Types of online games
Casual game
A casual game is targeted at or used by a mass audience of casual gamers.
Casual games can have any type of gameplay, and fit in any genre. They are
typically distinguished by their simple rules and lack of commitment required in
contrast to more complex hardcore games. They require no long-term time
commitment or special skills to play, and there are comparatively low production
and distribution costs for the producer. Casual games are typically played on a
personal computer online in web browsers, although they now are starting to
become popular on game consoles and mobile phones as well.
Social game
A social game can be considered as a casual game plus. It owns the simplicity
attribute which require no special skill to play and no long time commitment.
However, the key differentia here is it involves social interaction. It encourages
community activities and interactions. It is a game not only for personal relaxation
but also a place where people can build network relationship through the advance
internet technologies. Social games are also typically played on a personal
computer online in a web browser.
Web game
Web game or browser game is a computer game that is played over the Internet
using a web browser. Browser games can be created and run using standard web
technologies or browser plug-ins. Browser games include all video game genres
and can be single-player or multiplayer. Browser games are also portable and can
be played on multiple different devices or web browsers.
Browser games come in many genres and themes that appeal to both core players
and casual players.