1-Year Marketing Plan Essay
1-Year Marketing Plan
This one-year strategic marketing plan for Great Gaming Graphics (3G) has been created by its founder to obtain additional private funding for the company. Great Gaming Graphics has been launched two years ago and the discrete graphic chip prototypes that got developed during this time shows great promise, offering computer gaming graphic speeds in excess of 220% compared to the competition. The prototypes have been put on graphic card reference boards for standard PC’s and distributed to PC Gaming Review sites, PC Gaming magazines and PC Game companies for testing/review purposes and the reception was extremely positive. Alongside with this the Gaming Review Sites and Magazines published their findings in their publications and the reception of the general public (through letters, blogs) has been extremely enthusiastic. The next step in the process is to bring the prototype to market (expected launch is Q3 2015 and evaluate entry into new markets (mobile and High Performance Computing)
Great Gaming Graphics mission statement is as follows: “The best Gaming experience in the world. Period!!!!!!!” The Product 3G has developed graphic chips for the PC gaming market. The graphic chips (lower end model 3G100 and higher end model 3G200) offer substantially higher frame rates per second with the maximum feature set enabled (Anti-Aliasing at maximum) than the competition. The experience for the video gamer is that games can run with live like graphic experience on large resolution screens (including 4K screens) without any stutter of the motion (at least 60hz up to 4K resolution).
Consumer Product Classification
Gaming Graphics Cards are shopping products. Consumer usually spend 1-3 month researching the product they are looking at buying and replace their cards within 12-36 month, depending if they are hardcore or casual gamers. Gamers usually have a graphic chip brand affiliation (either AMD or NVidia), but will sway to another brand if the performance is at least 20% higher for the same price. Graphic Cards are usually ordered through online retail outlets like Amazon, Newegg and TigerDirect.
The target market for the 3G products are computer gamers (Males in the age group 14-50 years old), PC/Notebook OEM’s (HP, Dell, Lenovo, ASUS, MSI etc.) and Graphic Card Manufactures. The gaming market represents at least 100 Mio people globally, based on the best-selling computer games ever sold. The target audience for the product is split into three distinctive groups:
The Casual Gamer
The term “casual gamer” is often used for gamers who primarily play casual games, but can also refer to gamers who play less frequently than other gamers. Casual gamers may play games designed for ease of gameplay, or play more involved games in short sessions, or at a slower pace than hardcore gamers. The types of game that casual gamers play vary, and they are less likely own a dedicated video game console. The casual gamer represents approx. 80% of the gaming market. The casual gamer will upgrade his gaming experience from build-in graphics (at time of purchase of the PC/Laptop), if the price is low enough to justify the upgrade. The price a casual gamer is willing to pay for a better gaming experience is up to $50.
A mainstream gamer is a player with a wider range of interests than a casual gamer and is more likely to enthusiastically play different types of games, but without the amount of time spent and sense of competition of a hardcore gamer. The mainstream gamer enjoys games but may not finish every game they buy and doesn’t have time for long MMO (Massive Multiplayer Online) quests. The mainstream gamer represents approx. 15% of the gaming market. The mainstream gamer will seek out the best bang for the buck regarding his/her gaming experience and is willing to spend up to $200 for a graphic card.
A hardcore gamer is a player that spends the majority of his/her free time with gaming. The hardcore gamer is very competitive, often owns the latest high-end technology (High-End PC’s, Consoles, Multi-Monitor Setup, 7.1 Sound System etc.), are very technology savvy and often seek out and participate in gaming communities. The hardcore gamer represents only about 5% of the gaming market, but a large part of the earnings for the gaming hardware producers, because the margin of the high-end products are substantially higher than in the other categories. The hardcore gamer will seek out the best performing product, no matter what the price is. Some hardcore gamers install up to 4 graphic cards (with a total price of up to $3000 for the Graphic System alone) to have the best gaming experience possible (very high resolution across multiple screens and all graphic options enabled for the best experience)
Competitive Situation Analysis
Analysis of Competition using Porter’s 5 Forces Model
The discrete PC graphic card market generates approx. $6 billion revenue annually on a global scale. The two competitors in this market are AMD (Radeon) and Nvida (GEForce) with a roughly equal market share of about 20% each. Even though Intel is considered to be the market leader in PC graphics, they only have CPU embedded graphics with low performance/features and are currently not considered a competitor. NVidia has recently released an upgraded product line (Mainstream to High-End), with performance increases of approx. 20% across the product line and power reduction of approx. 25% compared with the previous models. Pricing got slightly reduced within the classification of their products (~$200 Mainstream, ~$300 Enthusiast, ~$600 High-End) to gain market share against its only competitor who hasn’t upgraded its product line yet. Nvidia is still producing its upgraded product line in a 28nm process and is not going to 20/16nm before the end of 2016.
3G’s current prototype is already produced in 20nm and is slated to be on 16nm at Q1/2016, which gives it an even greater greated competitive advantage over Nvidia, considering that smaller structures allow substantially faster performance of graphic chips while at the same time reducing power requirements. AMD’s current product line is still based on the three year old Graphics Core Next (GCN) design, which has been refined over the years but is clearly at its limit. Power consumption of AMD powered graphic cards is almost twice of Nvidia’s and more than 4 times of the 3G prototype.
3G has a clear advantage against both competitors, considering that 3G’s high-end prototype is currently 220% faster than either competitor, with a power use advantage of at least 50% which results in not only a lower power bill for the end consumer of the graphic card but as well reduced cost for cooling components. Additionally the low power requirements allow the use of smaller and cheaper power supplies, which is going to reduce the overall cost of a PC gaming machine even further. One large advantage of the reduced power requirements is that the graphics chip can be used in the upcoming STEAMOS machines (small form factor PC gaming machines, which resemble video game consoles) without sacrifice to performance.
Threat from New Entrants
There is a potential that ARM (with Mali) and Qualcomm (Adreno) redesign their current SoC (System on a Chip) products and license it to third parties to produce discreet graphic chips. Both companies offer their current products only in the mobile market (Phone/Tablets), which is high volume with a substantially lower margin per chip sold than the discreet PC graphic market. Alongside with this, both companies are in a very good position to drive power requirements even further down, considering their experience with the low power requirement of battery operated systems like phones and tablets. Threat from Buyers The following two potential issues arise from an end customer perspective.
1. Competitive products catch up or exceed with 3G’s product performance at the same price point, which will lower the appeal for end-consumers to use the 3G product. 2. A change in gaming habits to games that don’t have the high graphic power requirements and therefor curbing demand for the overall discreet graphic chip market. Threat from Suppliers Considering the initial lower volume of the product for production in a Semiconductor Fab (TSMC, Samsung etc.) 3G might get bumped to a lower priority if larger customers of the Fab are asking for a larger part of the capacity, due to higher demand. There is a limited amount of Fab Capacity available and it is not easy to move to another Fab (ramp-up time approx. 6 month). Therefor the contracts with the Semiconductor Fab have to be structured in a way to have a guaranteed amount of product delivered (with penalties associated if not fulfilled) plus a contract clause to allow ramp up of production by 10% on a monthly base.
Once 3G is getting bigger, it might make sense to pursue a dual supplier strategy, with the advantage of not relying on a Single Fab to produce all graphic chips and the disadvantage alongside with this with not getting high enough volume discounts. Threat from Substitutes One potential issue arising in the future is that IGP (Integrated Graphic Processing) units that are part of a CPU (Intel, AMD and SoC’s) are becoming powerful enough to play the most demanding games and therefor a dedicated Graphic Chip is not going to be required anymore. At this stage this is not a threat for the next 3 years (according to 5 year roadmaps of potential CPU/SoC providers), but could certainly change in the future. It takes 2-3 years to develop a competitive product and there is usually enough advanced notice in the market that a new competitor is going to enter the specific segment.
In this first paragraph, please introduce the SWOT analysis. For more information, see the recommended text. This section is laid out to summarize the analysis in a table, and is then followed by more detailed explanations of each item. Please see specific instructions in the four sections below the table. STRENGTHS *indicates core competency
*Worldclass ASIC Engineering Team
Experience of the Executive Management Team
Strong capital base
Only two Graphic Card Manufacturers signed up to produce Graphic Cards based on 3G chips No PC OEM relationships established yet
No reputation yet
Approaching the mobile market (Phones/Tablets), with either licensing the technology to SoC companies Finance the game development efforts of Independent Game Companies to focus their efforts specifically on the 3G product Develop out of the existing product a GPGPU, to be used in Supercomputers.
Competition (AMD and NVdia) moving to new Fab technology faster than 3G, removing the advantage on the power front Competition launching new designs that are as efficient as 3G’s, but with the advantage of greater brand recognition Game Developers hitting a plateau with their new generation of games, that don’t require anymore improvements on the graphics card front
3G’s first strength is having a world-class ASIC (Application Specific Integrated Circuit) engineering team. The members of the team have on average 15 years’ experience in the field of development of low power and high performance ASIC and some of the members of the 3ZG engineering team have been instrumental on developing in the past key products in the graphics card market. The second strength of 3G is the extensive experience of the executive management team. The CEO of 3G used to serve as the president of AMD (direct competitor) for over 10 years. The Sr. Vice President of engineering was the head of engineering at 3DFX in 2001 and after the acquisition of 3DFX by NVidia, he served as the head of engineering products until joining 3G. The Executive Vice President of Sales and Marketing has over 20 years’ experience in building rapid growth sales and marketing teams in seven companies. The third strength/advantage 3G has is its strong capital base. 3G got over the past 2 years funding from venture capital in excess of $175 million and currently still has $100 million in the bank, which at current and planned spending levels should sustain the company for another 30 month.
The first weakness in 3G’s strategy is that 3G has only managed to sign-up two mid-tier Graphic Card Manufactures (EVGA and XFX). The Graphic Cards Manufactures use the reference boards 3G delivers and implement their own cooling solution plus additional tweaks to boost performance of the cards by 5%-10%. A large part of the Mainstream and Hardcore Gamers like to buy their graphic cards from the top graphic card companies (ASUS, MSI, GigaByte), due to the custom designs and extended warranties. This might limit the initial availability of cards in the market until 3G can sign-up the top graphic card companies as well.
The second weakness in the strategy is that 3G has not established any relationships with PC OEM’s (Dell, HP, Lenovo etc.), which will limit the initial exposure of the product to the mainstream and hardcore gaming user. 3G will start pursuing 6 month after the launch of the product the PC OEM’s, to start including the lower end 3G products in their offerings. The third weakness in the strategy is that 3G doesn’t has the reputation of the two main competitors. AMD and NVidia have both been in the graphic card marketplace for almost 20 years and the end consumer knows what to expect from both companies. 3G is new to the game and will need to build this reputation over time to gain the confidence of the gamers.
Additional opportunities persist for 3G in several areas that can be explored once 3G had a successful launch of its core product and got additional funding for development. The first opportunity is in the mobile market (phone/tablets). 3G is actively looking into creating reference designs for the mobile market that satisfy the unique requirements present (very low power, with fast performance). The big advantage of the mobile market is that the volumes of the market are extremely high (total annual volume in excess of 1 billion units) and 3G would only need to license the product to SoC companies (e.g. Samsung, MediaTek, Apple, Allwinner) versus getting into production as well.
The second opportunity for 3G is the GPGPU (General Purpose Graphic Processing Unit) market, to develop cards that will power Supercomputers. The current prototype is already ahead of the completions (NVidia’s Tesla and Intel’s XEON Phi) and this is a very high margin, but low volume market that will give 3G additional market recognition. The third opportunities for 3G is to finance the game development of up-and-coming independent game developers to specifically optimize the games for the 3G product line. AMD (with Mantle) and NVidia (with PhysX) have been quite successful with the strategy to boost the sales volume of their products.
3G wants to look at potential threats that can derail the strategy in the future and has identified the following three areas: The first threat is that 3G’s competitors are moving faster to a new fab technology than currently presented in their roadmap, which would allow them to come closer to 3G’s low power requirements and allows them as well to boost the performance of their current generation of graphic chips without redesign. The second threat comes from 3G’s competitors launching radically new design concepts for their graphic cards, which are equal or better to 3G’s design. This would remove 3G’s current advantage entirely and 3G would potentially lose market share.
The third threat not only for 3G but as well for 3G’s competitors comes from Gaming Developers hitting a plateau with their next generation of games, which won’t require anymore additional performance from graphic chips. The graphic chip market is largely driven by game developers putting graphic features in place that require substantial upgrades to older gaming platforms. One example of developers driving the graphics chip market was the release of Crysis by Crytek in 2007, which was not playable (with all graphic options enabled) even on high-end hardware available at the time. It took almost four years to have powerful enough graphic chips to be able to play the game with all options enabled, which gave the gamer an almost super realistic view. Market Objectives (launch Q3 2015)
During the next year, 3G seeks to achieve the following objective using their marketing mix, including product, price, place (distribution), and promotion strategies. Successful launch of the 3G graphic chip/card on a global scale.
Subject: Video game,
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 23 September 2016
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