The Feasibility of Opening a Video Games Franchise in the Lurgan Area
Introduction
The coursework that I have chosen to do is the feasibility of opening a video games franchise in the Lurgan area. I decided on this because I have a keen interest in video and PC games, and because I live in the Lurgan area and frequently buy games I felt that the current retailers in Lurgan do not tailor to the needs of the common gamer. I felt that I may not be the only person to feel this way, and that there was a great need for a better service to customers and that there maybe enough demand to sustain a new business. There are no stores in Lurgan that currently specialise in video games and because of this there may be a gap in the market, which would be very important for the success of the franchise.
I chose to use a franchise to set-up in the Lurgan area as I felt that it was a quicker method, as it already has an established name nationally and internationally selling all over the globe. Electronic boutique is one of the most recognisable and trusted brand names in the interactive gaming industry. The franchise has enjoyed success and established themselves in countries such as USA, South Korea, Japan and Australia, showing that it is a symbol of quality that stretches across the language boundaries. They offer the customers wider ranges including video games and PC entertainment software, as well as video gam hardware, PC productivity software, PC accessories, interactive toys and trading cards. By opening a franchise I can offer customers immediate availability of all new releases.
I choose my aims so that they help indicate whether it is likely to be a profitable, and could help in indicating the strengths and weaknesses of setting up a new business. My aims would look at the competition I would face, the potential customers and whether there is a market, the pricing and marketing strategies to adopt and also the different financial aspects that I would need to consider on start-up and the first year. They would all aide me in seeing whether or not to proceed with starting up my own business
However some of the problems that I may face would be, whether there is a market, is such a business needed in the Lurgan area, which it may not as there has not been enough demand for a business to set up in the past, why was there no other firms willing to risk the Lurgan market. It may have been because the Lurgan area is only big enough now to sustain such a store, or that no proper research has been done and Lurgan is an untapped market. Another problem that I may face is the hectic time scale and cost of setting up a business, as I may find that at the end it may not be financially viable to start up a business, or that time may restrict the amount of research done. But these factors are hard to predict and even harder to prepare for.
I feel that this coursework would be advantageous to myself as it helps me to see whether I am right in thinking that Lurgan is long overdue for a games store. I will enjoy doing the research into something I have an interest in. To obtain the information that I need to come to a fair conclusion I will need to look at both primary data and secondary data I will use various research methods. To collect my primary data I will conduct both qualitative and quantitative research. To collect my secondary data I will conduct desk research and constantly assess the validity of my findings throughout.
Methodology
I will now look at the research that I will do to accomplish the aims, which I set at the start of my feasibility study. The purpose of market research is to obtain information on the market conditions for my business. It will concentrate on three main areas, the product, the market, and the competition.
Aim 1: To research and evaluate the local and national competition to see whether there is space in the market.
To achieve this aim I will need to do research into the Craigavon and Northern Ireland. This will be quantitative, as it will be factual information on the location and possibly sales of our competitors and other Electronic Boutique stores and maybe I may also include qualitative research through observation of our competitors and other electronic boutiques. I can achieve this through desk research and by looking at the firm's own national statistics which will give us information on current N.I. Electronic Boutiques. Also we could find information through quality papers and specialist magazines giving us lists of competitors around Northern Ireland and where they are located. Desk research is useful as it is less expensive than field research, and the information (being already available) is quicker to obtain. However competitors may be reluctant to give information on sales. Observation can be used to give me knowledge for later research and give informed assumptions for my later research. I will do covert observation of my competitors, as it will be unlikely that my competitors will allow me to observe their business. However there are time constraints on my research and I may find difficulties in observing store. Also my research will be based on my own interpretation of my subjects actions. But it will let me see how the day-today running of the business happens.
Aim2: To build a profile, find the segment of my potential customer and whether the Lurgan area has enough to sustain a computer games shop.
To achieve this aim I will need to do research amongst my possible customers in the Lurgan area. I would like to be looking at concentrating on qualitative research, as I want my research to show attributes opinions, behaviours and beliefs of my potential customers. However postal surveys or questionnaires would be probably be used because of time constraints. As there would be little research done on the feasibility of opening such ...
This is a preview of the whole essay
Aim2: To build a profile, find the segment of my potential customer and whether the Lurgan area has enough to sustain a computer games shop.
To achieve this aim I will need to do research amongst my possible customers in the Lurgan area. I would like to be looking at concentrating on qualitative research, as I want my research to show attributes opinions, behaviours and beliefs of my potential customers. However postal surveys or questionnaires would be probably be used because of time constraints. As there would be little research done on the feasibility of opening such a store in the Lurgan area, I would need to concentrate mainly on field research. I would start by doing a questionnaire, which I feel would be useful in building a profile of my potential customers and would also indicate the minimum customer base that I may aspire to. I would hope to do face-to-face questionnaires with both closed and open questions. So that as well as gain statistics, people can voice their opinions as well as giving the interviewer the ability to probe, have high response rates and control questionnaires, which I feel is vital in making the business a success. However there may be interviewer bias, high cost, and low dispersal of the population. The questionnaires would also be done as a postal survey as this may cut down on some of my workload and also allow me to do stratified random sampling. Then I may stratify on the basis of age, sex and also income, and this will mean that each group of the population is represented so that I can see which groups are my target segments. Also in this aim I can look at desk research in the form of census data which will give me statistics on the basis of age, sex and religion. And another useful source of data would be surveys like those published by games magazines such as Edge which contains data on the segments of computer gamers, taking into consideration age and sex, but this may be a costly exercise as back copies of magazines are expensive.
Aim 3: Finding out what pricing strategies and marketing strategies should be adopted, looking at my target segment.
This could be done, first by using the field research that I have already done, asking customers what they feel about opening a store in the Lurgan area and general information and whether they own a computer. Also what would make them more interested in buying games from my business (e.g. special offers, reduction in prices etc.). And also I need to look at other Electronic Boutiques and how to franchise would act, as I am restricted in some of my actions, such as price and marketing strategies. I would need to gather information from Electronic Boutique and some of the other franchises and see what way they would set out their price and marketing strategies and then base mine on something similar to theirs. This would be desk research, but would contain quantitative and qualitative data, as there would be past data and also what the franchise's opinion of these strategies is.
Aim 4: Look at the cost of land in the Lurgan area including the construction and running costs of a franchise and whether it is feasible.
This would be desk research as it would be all data gathered from other sources. When looking at the cost of land I would consult Estate Agencies about property that would be suitable for a major franchise in the Lurgan or Craigavon area. I would look at the price of setting up in the different parts of Lurgan and which would be the most successful and cheapest. However there may be problems with gaining this information as commercial properties come and go so fast. I will then get information on the cost of setting up and running an Electronic Boutique franchise shop, including details on starting cost and loyalties. The majority of franchisees borrow money from one of the main high street banks, though, and many established franchisers have good contacts with specialist franchise departments at the major banks. In addition to sharing with you an in-depth market awareness and information on particular franchisers, these franchise specialists will often help you to put your case to the local bank manager for the borrowing you need. The banks regard good franchising as a sound investment and they will generally lend more, and on better terms, than if you were starting your business from scratch. However it would be hard to cut some of the costs as they would have to be similar to the other franchisees.
Results and Finding
Aim 1.
In this table we can see all the existing Electronic Boutique stores that currently operate in the Northern Ireland area. As we can see none of these stores operate in the local area with the closest being Lisburn. All the information was gathered looking at secondary data supplied by Electronic Boutique.
Store Name
Address
Telephone No.
Electronic boutique*
Erneside Shopping Centre Enniskillen
66325681
Electronic boutique*
6 Castle Lane
Belfast
90248386
Electronic boutique*
Blomsfield Avenue
Belfast
90456880
Electronic boutique*
6 Bow Street
Lisburn
92629548
Electronic boutique*
6 Kingsgate Steet
Coleraine
70328207
Electronic boutique*
Longwood Road
Newtownabbey
90869878
In the table below we can see the national competition that specialise in computer games. This is also secondary data that was recovered from directories and magazines such as the yellow pages.
Store Name
Address
Telephone No.
Deal Me in Games
2 Ballydown Meadows
Banbridge
40629028
Game
Buttercrane Shopping Centre
Newry
30257948
Game Ltd
Tower Centre
Ballymena
25639000
Game Ltd
Bloomfield Centre
Bangor
91272127
Game Ltd
5 Donegal Arcade
Belfast
90314733
Game Ltd
Bow Street Mall
Lisburn
92607727
Game Ltd
Richmond Centre
Londonderry
71630293
Game Zone
30 Waterloo Street
Londonderry
71288882
Games Machine
41a Molesworth Steet
Cookstown
86769944
Games & Movies
3 Frances Street
Newtownards
91812788
The table below shows the local competition which is secondary data. This information was gathered from local papers and national directories.
Store Name
Address
Telephone No.
Games Alley
32 High St
Portadown
38333370
Whizz Kids
High Street Mall
Portadown
38339960
Replay
Lisburn Road
Craigavon
38336000
I also had done primary research in the form of covert observation the local firms who sell computer games but do not specialise. I found that the competition from these firms was not significant enough to be considered as serious competition as they have high prices and small ranges.
Aim 2.
I had done a questionnaire randomly to persons in and about the Lurgan area. I felt that 20 would be enough for a representative sample. The results that I found are shown below as a percentage. Question nine is two sample quotes.
. Yes = 100% No = 0%
2. Male = 70% Female = 30%
3. 3-12 years = 5% 12-18 years = 55% 18-35 = 40% 35+ = 0%
4. Yes = 100% No = 0%
5. PC = 90% PSX = 60% PSX2 = 5% DC = 10% GBA = 10%
6. 1-2 months = 10% 3-6 months = 25% 6+ = 65%
7. Yes = 15% No = 75% Maybe = 10%
8. Yes = 85% No = 10% Maybe = 5%
9. "The current stores don't have enough quality games"
"The games don't come out in Lurgan until weeks after their release"
I later decided on a second questionnaire about 3-4 days later after I had looked at my results from my first questionnaire. I did this because I felt the question of if people buy games and where needed to be done. I felt a sample of 10 would be adequate. They are shown as percentages below.
. Yes = 90% No = 10%
2. 3-12 years = 0% 12-18 years = 50% 18-35 = 30% 35+ = 10%
3. Yes = 80% No = 20%
4. 2 Electronic Boutique, Belfast 2 Game Ltd., Belfast
3 Whizz Kids, Portadown 1 Game Ltd., Lisburn
Aim 3.
The pricing strategy would be directly affected by the franchisee. They would also have a lot of say in the marketing strategy of the business. Each of the products that I would buy and other things such as promotion would be the same for each of the electronic boutiques in Northern Ireland.
The strategy and vision of the business is:
OUR STRATEGY
We operate a dual brand strategy in the UK; Electronics Boutique and GAME. Both trade with the same customer orientated approach and strive to provide excellent customer service. The Company's ultimate objective is to be the shopping destination of choice for all games, PC software, hardware and peripherals.
We have grown substantially since 1995, both organically and via acquisition. In May 1999, we acquired our largest competitor, GAME, and integrated their 82 stores into EB's existing strong infrastructure. May 1999 also saw our first stores open outside of the UK and Eire.
OUR VISION
Expansion into Continental Europe has always been our stated ambition. A key objective of ours is to build on our existing European presence in Sweden and on our recent acquisition of the leading specialist retailer in Spain, CentroMail.
We continue with our store opening program in the UK and Eire, as well as adding to our concession portfolio with Debenhams and House of Fraser and our racking arrangement with Sainsburys.
Aim 4.
I looked at the price of some of the property in Lurgan and Craigavon to buy and to rent. I used internet sources and Century 21 in gathering my results, but little could be found because of the high demand for commercial property in Lurgan meaning that there is rarely many retail properties available.
35 William Street, Lurgan
Co. Armagh BT66 6JA £75000
Property Details
Commercial property with potential in a busy location close to the town centre No. 37: Retail shop unit 15'2" x 23'O" Sales area: Kitchen area : outside toilet in rear yard Electrically operated security screen on front window. No. 35: First and second floor retail/office accommodation 19'O" x 23'O" + 8'O" x 11'O" Separate entrance door with security screen Some internal finishing is required to complete the accommodation.
42-44 High Street Lurgan
Co. Armagh BT66 8AU £TBA
Property Details
Landmark Commercial Premises in a Prominent Position with a very Notable Façade located in one of Lurgan's Best Positions Partly let to YMCA, E McKane and Mid Ulster Motoring Magazine Of Interest to Owner/Occupiers or Investors Early Completion Available
£275000
2 King Street, Off Queen Street,
FOR SALE OR TO LET
WAREHOUSE PREMISES c. 1,038 SQ.M. (11,166 SQ.FT.)
These premises occupy an easily accessed location in King Street, close to its junction with Queen Street, which is one of Lurgan's main arterial routes. The premises have convenient access to the M1 and the provinces wider road network and would suit a variety of uses to include warehouse, workshop or distribution.
The property may also be suitable for some form of redevelopment to include apartments and town houses etc., subject to any necessary planning permission. The site area is calculated to be approximately 0.150 hectares (0.370 acres). This area has been scaled from an Ordnance Survey extract.
The property is currently on the market due to the expansion of James Hamilton & Co. (Lurgan) Ltd.
Sample Questionnaire (Please tick appropriate box)
. Do you live in the Lurgan Area Yes No
[ ] [ ]
2. What sex are you Male Female
[ ] [ ]
3. What age are you 3-12 12-18 18-35 35+
[ ] [ ] [ ] [ ]
4. Do you own a computer Yes No
[ ] [ ]
5. If so what computer do you own PC PSX PSX2 DC GBA
[ ] [ ] [ ] [ ] [ ]
6. How often do you buy games 1-2 months 3-6 months 6+ months
[ ] [ ] [ ]
7. Would you purchase them in the Lurgan area Yes No Maybe
[ ] [ ] [ ]
8. Would you use a specialist games store in Lurgan Yes No Maybe
[ ] [ ] [ ]
9. What do you feel about the current game retailers in Lurgan?
_____________________________________________________________ __________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________
Sample Questionnaire 2 (please tick appropriate)
Q1. Do you live in the Lurgan area Yes No
[ ] [ ]
Q2. What age are you 3-12 12-18 18-35 35+
[ ] [ ] [ ] [ ]
Q3. Do you play video games Yes No
[ ] [ ]
Q4. If so, where would you buy you games and equipment
Shop_____________________________
Town_____________________________
Aim 1
Within the results many important factors have arisen. Looking at the map produced using my national competition and local competition I can see that the stores are nearly evenly spread across Northern Ireland. This tells me that there is a large enough market for computer games in the Northern Ireland area as these stores can be sustained. On the other hand this tells me that there is already a lot of established national competition, and the business I am opening is not entering a gap in the market. A large number of the stores (4) are situated in Belfast, which can be easily accessed by Lurgan through the m1. So I would need to treat these Belfast stores as a serious threat, and I would need to keep the local market from buying there games there and also by enticing some of there customer to shop at our Lurgan store. This would mean that I would have to give the customers something that is not offered in the Belfast stores. The local competition consists of three stores in the Craigavon area which, although not in the immediate area, still pose the most serious threat to my business. The stores are already established, and this means that there is a market, although there may not be enough room for another games store. But the advantage I have is that none of these three stores are based in Lurgan town centre, so that would mean there is an untapped market that I can enter into.
My covert observation of game shows me a successful business in the Belfast area. I taught me that a computer games store is one in which a lot of people browse and not buy the first time that they are in the store. This would tell me that we would need to tempt customer into buying what they may be interested in. This would require me to hire skilful staff who would have a keen interest in computers and would have a wide scope of knowledge about the games and equipment that would be available.
I would hope to be a manager that has a lot say over each aspect of the business I would be able to adopt a McGregor theory Y approach. I would do this, as I would like to delegate to my workers to effectively use their skills to the highest level. It would also help in improving organisation and motivation, and also help in the costs that may be meet in hiring extra managers or staff. However, as I want a lot of control over my business I may have some characteristics of a theory X manager as I would be on the floor as much as I could, and also would try and make all the main decisions to be taken in the business.
Aim 2
Analysis of my questionnaire results provides me with various important numeric results. The first important result that I came across was that every one of my respondents owned a computer. This was very significant, as my potential market would have to be persons who already owned a computer, and would be interested in my goods, and so if they did not already own a computer these goods would be useless to the consumers. Briefly this means that this question give me an estimate of how large my potential customers is. However these potential customer may not be interested in games and owning a computer may not mean that they could be persuaded to attend my store. Knowing now if the person owned a computer or not I then needed to find out what type of computer they may own. I found that the majority of respondents owned a PC or a Playstation. This was significant in that the second most popular was the Playstation which is a pure gaming machine, and this would suggest that there is a large number of persons living in the Lurgan area who enjoy computer games and may be interested in my store. Knowing who owns a computer games console I was then interested in knowing how frequently the respondents would buy computer games, to know how often customers would use my store. Over half of the respondents would buy their games over six months apart. This is a negative result as it tell me that there may be spells when the business may not have much custom and periods when it does, making balancing the books an up hill task. I was interested in knowing where my respondents would buy their games to know where most of my competition comes from (locally or nationally), and whether the Lurgan market would attract any of their custom. The results showed me that the majority of the respondents would not buy their games from the Lurgan area and so my national competition would pose a bigger threat than first expected. Lastly I was curious to whether the respondents would use a specialist store if it were available. The majority said that they would mean that a lot of the respondents who do not buy their games in Lurgan might if they had a better quality of service. My second questionnaire done to gain further information showed me a very significant result. Most of the first questionnaire respondents did not purchase games in the Lurgan area, and so I needed to look at where they would then purchase. I found that 3 respondents purchase games in Belfast, 1 in Lisburn and 3 in Portadown. But what was most significant is that the store in Belfast and Lisburn (part of the national market) were specialist store such as the one that I was planning. This could suggest that these specialist stores attract my local market away because of something that only a specialist store offers.
Aim 3
Aim 4
When looking at the property values in the Lurgan area I came across various properties, which could be potentially busy locations, where I could attract a wide and large scope of my potential customers. I needed a retail property large enough to accommodate all of my products and their layout, including enough space that would be needed to present each part in a manner that is organised and invite the customer to look at our products. I also needed a property that was not going to push up my fixed costs so high that I could not possibly meet them, and would have problems in the long term in making a profit or be able to break-even. The first property that I had looked at was the most promising of all the properties in the Lurgan area. It was located at 35 William Street Lurgan. At £75000, this was the cheapest property that was currently available in the Lurgan area, and cost is an important factor, as I would wish to keep my possible costs to a minimum. I could attain a mortgage on the property meaning that I would not have to pay out such a large sum on start and not run into financial difficulties from the start. Also banks are always interested in investing in franchises as they are seen as less risky than most other business start-ups. The property is also a size that is feasible enough to hold everything that I require and also leave enough floor space for me to work with. I could use the top floors for offices for myself or to rent out to other firms. However these floors need some additional work done. The property is also located just 100-200 yards from the town centre and is adjacent from a car park meaning that this is a very accessible property. I found very few properties in the Lurgan area, with Century 21 stating 'most retail properties are sold before a brochure can be made'. The other properties that I had found in the Lurgan area where either too small, expensive, or located too far from the town centre.
2