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Industry

Introduction

There are two main strategies, which are used in the world trade. First one, the Red ocean strategy, consists of competing in existing market space, beating the competition, exploiting existed demand and making the value-cost-trade off, while the Blue ocean strategy creates an open market space, makes the competition irrelevant and creates or captures new demand by breaking the value-cost-trade off. In a common result strategies ‘align the whole system of a firm’s activities’ in the battle for diversity and low prices (Chan, W. K. & Mauborgne R., 2008).

However, despite considerable efforts of the company in choosing the right strategy, annual sales of video console units have been declining for 5 years and in 2007 peaked worth  $3.7 billion. That is why new researches have been conducted, in order to change the situation for better.

The statistics on the industry

One of the most important things for every trade strategy is their porters, in particular customers. Current market size of the company comprises almost 3.8 billion of purchasers, who are divided in 3 groups, by “similar needs and purchasing behaviour” (Chan, W. K. & Mauborgne R., 2008). First and the largest group is composed of young people aged from 6 to 21 year olds. To be exact, they constitute a basic part of all customers. What is more, 85 % of all their purchases are made in low price-oriented channels, such as hypermarkets, online electronics stores, catalogue companies or auction sites. Second group of customers consists of people, who are 22-35 years old. They make 60% of their purchases in video game chains. These chains create "strong relationship with customers, including loyalty cards for discounts" and "carry an extensive range of gaming console ‘bundles’ from low end to high deluxe" (Chan, W. K. & Mauborgne R., 2008). Lastly the third group includes customers, who are more than 36 years old and who are mostly oriented (85%) on specialized electronics stores, for example: “independent regional distributors or major multiples with national presence” (Chan, W. K. & Mauborgne R., 2008).

Here, in the gaming industry market, it is impossible to dispense without competition. Shiny Apples, Purple Plums, Yellow Bananas, Blue Buddies become four well-known forces, which compete powerfully with one another, in order to share areas of selling products .Blue Buddies, also known as Red Box forms 25% of all gaming industry units, while its income reaches 0.83 billion dollars. Despite the fact that it is a good indicator, it must be improved in nearest future, as "all competitors are expected to upgrade their existing offering while decreasing their price at the same time" and our company hopefully will become even more prominent (Chan, W. K. & Mauborgne R., 2008).

All these processes are not simple and need to have specially designed ‘product life cycle'. The cycle consists of numerous decisions: "Product upgrades, production, price, marketing and segmentation strategy, geographical expansion & distribution coverage, corporate projects, finance" (Chan, W. K. & Mauborgne R, 2008). Each decision is compulsory, so it cannot be omitted. Product upgrade is a particularly important item, which shows a reaction "to the changing needs of customers and to the technological advances of competitors" (Chan, W. K. & Mauborgne R., 2008). Another item is a decision about the production, which depends on market fluctuations, your or competitor's moves and upgrades of products. W.Chan (2008) explains: "The Production department is highly flexible and will always manufacture the required quantities in the best possible conditions". Prices become the main index of client's interests and your incomes. The higher prices are the lower interests appear and conversely, incomes increase. Moreover, marketing budget must be allocated "to purchase advertising space, build and maintain the awareness of customers for the products", while segmentation strategy "must determine which consumer groups are the most attractive ones for your particular product" (Chan, W. K. & Mauborgne R., 2008). Mentioned items significantly assist in creating 'product life cycle', as well as geographical expansion, distribution coverage, corporate projects and finance do, for example: "Corporate Projects are aimed at increasing the productivity, reducing the costs or improving the organization capabilities" (Chan, W. K. & Mauborgne R., 2008). In general result the 'cycle' is constructed and the processes are begun.

Hints on the group strategy

In conclusion, W.Chan (2008) gives some useful advices, which should be mentioned in order to reach the success:

1)      Establish a good working relationship within your team;

2)      Each team member must be involved in the all discussions in order for everyone to have the same understanding of the business situation;

3)      Try to avoid letting each member concentrate solely on his/her area of professional expertise;

4)      Rotate responsibilities at regular intervals;

5)      Maximize your internal resources and make sure that everyone benefits equally from the BOSS experience and key learning.

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