Introduction
The Company
The company I have chosen is GameStop. GameStop is primarily a video games & video games-related product store; typical products include:
● Latest generation gaming consoles & video games
● Game guides
● Gaming console accessories like controllers, carrying cases
● Games-branded clothing, collectables
● Credit cards & membership subscriptions,
All of which, except credit cards and membership subscriptions, can be both used & brand new. GameStop also buys back games, consoles, and electronics like tablets at a low price and resells them at a markup.
GameStop also usually offers older generation used video games & consoles, but can depend on locality, as GameStop doesn’t specifically seek to stock these items and only accepts local buybacks.
The Problem
The last twenty years has seen a constant erosion of GameStop’s position in the games-buying industry. Internet-based options, such as Steam (launched 2003), Amazon (games sold beginning in 1998), first party options like Microsoft Store and PlayStation Store have contributed mightily to the decline in GameStop’s market share. GameStop market cap has gone from an all-time high of $9.7B in Dec. 2007 to just $250M in June 2020.
All of these options have a significant convenience advantage over GameStop in that you don’t need to leave your house to purchase products, and in some places, Amazon might be able to deliver a physical product in around the same time it would take to go to an actual store. Building on this convenience advantage, many games are now sold totally digitally, so that you never own a physical copy of a game, but rather a software key that gives you the ability to download the game on your platform of choice. In addition, due to the logistical advantages associated with running a website and a warehouse, rather than just a storefront and a backroom, you can often find games online for far cheaper than you could get in a store, you rarely suffer from lack of inventory, and differentiation is based on price rather than availability. Online vendors can also offer a way to buy used versions of a product you’re seeking to buy, so the used games market has also dried up for GameStop as well. GameStop has lost its core demographics to competitors that beat it in every way. GameStop is dying.
Consumers Chosen
Since GameStop is not the only option available to consumers for buying games, I chose to segment based on whether or not a person would consider buying a product from GameStop in the next month or not. This was chosen as it is highly unlikely to find a consumer who has never bought from GameStop, or a consumer that would only choose to buy gaming related products from GameStop. This segmentation allowed me to easily find survey participants based on an immediately answerable question.
Questionnaire Discussion
For this discussion, Group A will refer to those who would consider buying a product at GameStop in the next month, and Group B refers to those who would not consider buying a product in the next month at GameStop.
The questionnaire provided interesting results. Overall, respondents found that GameStop had less functional value, but greater social and conditional value. Group A generally found the functional value of GameStop higher, especially their advertisements and customer service. 66% of Group A found that the advertisements were useful, 80% said they had the kinds of products they wanted, 86% said GameStop usually had the product they wanted, while 80% also said that GameStop employees made a positive impact on their purchases. Conversely, only 33% of Group B responded that GameStop had useful advertisements, a small majority of 53% said GameStop usually had the product they wanted, and 46% said GameStop employees had a positive impact. Neither Group found that GameStop is the easiest way to shop, 26% and 0% respectively, and both Groups agreed that GameStop was more expensive, 46% and 93% respectively. Clearly, Group A finds greater value in the customer service aspect of the transaction, but it also appears that Group B finds little functional value in GameStop as it currently exists.
Group A and B are split on the social value of GameStop. 60% of Group A thought that GameStop provided social value, while just 13% of Group B felt the same way. 100% of Group A thought GameStop was inclusive to their demographic, along with 86% of Group B felt the same way. Both Groups unanimously agreed that inclusiveness was an important qualifier for their purchases, so it is good that
GameStop scored strongly on this. 26% of Group A and 13% of Group B said that GameStop’s social value had decreased to them in recent years, but it is not clear if this is because it had none before, or if it has actually stayed constant to them. Both Groups feel that GameStop is not capitalizing on their key demographics, with 80% and 73% of Group A and B respectively responding affirmatively to the question. Respondents in both Groups perceived the demographics of GameStop to be similar: Generally, between 13-31, between low-to-mid income, with race appearing to hold no particular bend in this population. Crucially, they perceive the demographics GameStop serves to generally be unsocial, with 53% of respondents from both Groups thinking their key demographics were either normally unsocial or highly unsocial, with the rest believing them to be normally social. No one in either Group felt GameStop’s demographics were highly social. As social value is tied to how social you are as a person, GameStop should not be banking on a community propping them up: Value has to come from somewhere else.
The emotional value portion of the questionnaire showed strong emotional value for GameStop from Group A, with split results for Group B. 100% of Group A said they felt both safe and accepted at GameStop, while 86% of Group B responded the same for both questions. However, Group A and B split on whether they felt GameStop genuinely cared about customer experience and satisfaction; Group A responded 86% yes, while Group B responded 33% yes only. This shows that while the customer satisfaction has worked well for returning customers, those who do not regularly shop at GameStop do not perceive it in a positive light. Just 33% of Group B felt positive emotions when they thought about GameStop, while 86% of Group A felt positively.
I feel this is leakover from how consumers perceive the functional and social values of GameStop; those who get a lot out of the advertisements and customer experience, along with the social value derived from their positive experiences with GameStop employees, think and feel positively about GameStop, while those who don’t perceive those values do not look at GameStop positively. Just 13% of Group B felt something would be missing from their experience if they shopped elsewhere, and only 20% of Group B thought their purchases at GameStop would be worthwhile. This contrasts sharply with Group A, who responded 60% and 80% respectively to these questions. Obviously, such a sharp contrast should be concerning to GameStop, especially as they continue to lose loyal customers to other options.
The conditional value for GameStop appears to be high. 93% of Group A and 53% of Group B said that urgency was a conditional that impacted their decision to go to GameStop; neither Group found the desire to save money to be a strong qualifier (66% and 6% respectively). Proximity to a store was a strong predictor as well, with 73% of Group A and 80% of Group B responding affirmatively. Sales and deals were also a strong predictor, with 80% of Group A and 66% of Group B saying this had a positive impact on their choice to use GameStop. Both Groups found some value in expertise/knowledge of GameStop employees, 53% and 40% respectively.
GameStop had little epistemic value to consumers; no respondents had never been to a store and wished to try one out. Boredom does not seem to fuel physical game purchases, probably because it requires a trip to the store; this is also fueled by only 20% of Group A and 13% of Group B responding that they were curious about specific games available at GameStop, which may point to a failure in advertising. None
had been recommended by family/friends, and just 13% of Group A and 6% of Group B said they were interested in products only available at GameStop. Again, this may point to a failure in advertising. However, 46% of Group A found that GameStop was convenient to their lifestyle, which suggests that physical stores can be convenient for people who currently go out for work; only 20% of Group B felt similarly.
Marketing Analysis
Demographic Profile
Ages 7+
Men and Women
Urban & Rural
Any occupation
Segmentation
Customers are primarily looking for good prices, good deals, and ease of purchase. Most games do have a social aspect to them, but these are focused in online communities, not locally, so emphasizing this aspect appears to be an inefficient segmentation.
Marketing Strategy
Product
The product itself is games & gaming-related products, like accessories.
Place
While GameStop currently operates as brick-and-mortar stores, GameStop should begin a transition to emphasizing their website and online presence. I believe this makes the most sense given both the pandemic, and where the industry is currently heading. As mentioned in the introduction, the last twenty years has seen many entrants into the games-selling business, and almost all of them are purely online. GameStop is actually the outlier here; other than regional chains there are no true brick and mortar games stores left, which once were the only entrants into the industry. By moving to online, GameStop can begin to chip away at the competitive advantages its competitors currently enjoy over it. This does not necessarily mean closing all brick-and-mortar stores, but it does mean de-emphasizing them as the core of its business.
Promotion
As discussed in the questionnaire section, it appears that GameStop suffers from a failure of advertising. I propose that GameStop should relaunch its online business – not a rebranding, just a relaunch – which would be tied to a series of promotional events tied to currently popular games. As game popularity changes often, I will not mention many by name, but some, like Fortnite, have frequently run promotional events with other companies, like with the Avengers and Star Wars. GameStop could do something similar, with special in-game events and items tied to creating a GameStop website account, buying a Fortnite related product on the website, etc. This could be repeated with as many games as GameStop could feasibly manage, with the upside that
promotion could end up netting them a profit during the promotional period through associated purchase.
Pricing
Pricing appears to be a problem for GameStop as well, as the questionnaire demonstrates. GameStop should launch, as part of their promotion, a universal price match guarantee on any item they sell, so that pricing is no longer an argument against GameStop.
Conclusion
There is little doubt that GameStop is currently hobbling along; the CFO recently resigned, and the CEO will probably be resigning soon as well. The pandemic has been very rough on brick-and-mortar stores, and GameStop had been in a near decade long decline in market share, market cap, and stock pricing beforehand. Regardless of actions taken or not, GameStop will see many store closures. But what can be done to salvage what is left of the company?
Option 1: Wholly owned subsidiary of Amazon
Amazon’s purchase of Whole Foods in June 2020 was seen as a watershed moment for the company, where it decisively moved into the brick-and-mortar market after 23 years as a completely online business.
Pros
1. Provide a much needed boost to stabilize a dying company
2. Ability to leverage Amazon’s massive infrastructure and inventory
3. Exposure to Amazon’s consumer base
Cons
1. Regardless of success or failure, the future of GameStop is out of its own hands
2. A buyout could cause currently loyal consumers to GameStop to seek other options
3. Even with a buyout, there is no guarantee GameStop could beat out other competitors for more market share.
Option 2: Pivot business to online; shed most locations
The current structure of GameStop is unsustainable, it needs drastic change to survive.
Pros
1. Helps GameStop pivot to where the future of the business is
2. The physical stores, which cost money in terms of rent, employee payment, etc., will no longer be on the books
3. Gives GameStop more access to the kind of competitive advantages that other competitors currently enjoy
Cons
1. Change could eliminate GameStop’s only key differentiated from their competitors
2. GameStop would have to figure out a way to increase traffic to their website over alternatives
3. Could lose out on segments of their consumer base that prefer to buy in physical stores
GameStop is truly dying: It has lost its key demographics to superior options – in my own opinion as a consumer – and requires drastic change. The better solution, in my opinion, is option #2. If GameStop were bought by Amazon, I believe that eventually the reality of the situation would either be GameStop closing, or GameStop becoming an online-only store as described in option #2, with only the few profitable and sustainable stores left to continue on. Moving to online yields the same benefits that GameStop’s primary competitors have and would help GameStop springboard into the kind of games store that Steam or the native stores on the Xbox & PlayStation are. The important focus for a move to online would be to de-emphasize GameStop’s traditional business (used & brand new physical copy sales) to digital sales based around exclusivity deals – where game developers would be paid to provide special perks for buying a game from GameStop – without having to deal with the immense capital drag that physical locations represent in a hyper competitive industry. In addition, I think that the pros outweigh the cons, in that while this move could lose them customers in the short term, it also exposes them to significantly more customers online in the long term, if GameStop can find and utilize a successful strategy for bringing more customers into their online business. Clearly, their physical stores are not generating enough profit to justify their running, so a pivot to online frees them from their heaviest anchor while potentially opening them up for growth in a sector (online sales) that the entire industry depends on. This move would make GameStop a very late entrant to this market, at least as the
full focus of the company, but in business it is better to be late than never do it and suffer the consequences regardless.
Appendix 1
Functional Questions Table
Question
Group A Yes%
Group B Yes%
Is the easiest way to buy these products
26%
0%
Is more expensive than other options
46%
93%
Usually gives me the most options/variety
40%
0%
Has advertisements that, as a consumer, are useful to me
66%
33%
Helps me buy the kind of products I want
80%
40%
Usually has the product I want
86%
53%
GameStop employees make a positive impact on my ability to make the right purchase
80%
46%
Social Questions Table
Question
Group A Yes %
Group B
Age Strata
13-18: 40%
18-31: 60%
13-18: 60%
18-31: 40%
Economic Strata
Low Income: 26%
Middle Income: 74%
Low Income: 33%
Middle Income: 66%
Race Strata
White: 20%
Hispanic: 33%
Black: 26%
Asian: 20%
White: 33%
Hispanic: 40%
Black: 13%
Asian: 13%
Does GameStop provide a social value to you as a person?
60%
13%
Do you think GameStop is inclusive to your demographic?
100%
86%
Regardless, does inclusiveness matter to your choice?
100%
100%
Has GameStop’s social value increased to you in recent years?
26%
13%
Do you think GameStop is failing to capitalize on demographics that would be naturally favorable to them?
80%
73%
Conditional Questions Table
Question
Group A Yes %
Group B Yes %
Urgency
93%
53%
Desire to save money
33%
7%
Interest in used games, game related products
40%
60%
Proximity to a store
73%
80%
Want new entertainment
53%
26%
Frequent sales/deals
80%
66%
Require expertise/knowledge for purchase
53%
40%
Epistemic Questions Table
Question
Group A Yes %
Group B Yes %
I have never been to a game store and wanted to try one out
0%
0%
I am bored of other entertainment options
26%
7%
I am curious about specific game(s) available at GameStop
20%
26%
I am a frequent buyer/player of games
40%
33%
Family/friends recommendation
0%
0%
GameStop is convenient for my lifestyle
46%
20%
I am interested in specific products available only at GameStop
13%
7%
Demographic Questions Table
Question
Group A Yes %
Group B Yes %
What is your gender?
Male: 73%
Female:27%
Male: 86%
Female: 14%
Age
15-20:26%
21-25: 33%
26-30:33%
31-40:7%
41-50:
51-70:
70+:
15-20: 40%
21-25: 53%
26-30:
31-40: 7%
41-50:
51-70:
70+:
Education Completed
High School: 26%
College: 73%
Masters:
Phd:
High School: 20%
College: 80%
Masters:
Phd:
Where do you live?
City: 26%
Suburbs: 26%
College Campus: 46%
Other:
City: 40%
Suburbs: 13%
College Campus: 26%
Other: 20%
Monthly Income
$0-$3000: 93%
$3001-$6000: 7%
$6001-$12000:
$12001+:
$0-$3000: 80%
$3001-$6000: 20%
$6001-$12000:
$12001+:
Monthly Spending on Gaming
$0-$50: 46%
$51-$100: 46%
$101-$200: 7%
$201+:
$0-$50: 53%
$51-$100: 26%
$101-$200: 20%
$201+:
Appendix 2
FUNCTIONAL QUESTIONS
Functional value – the perceived utility acquired by an alternative as the result of its ability to perform its functional, utilitarian, or physical purposes. Alternatives acquire functional value through the possession of salient functional, utilitarian, or physical attributes.
Using GameStop to buy games and gaming related accessories
1. Is the easiest way to buy these products
2. Is more expensive than other options
3. Usually gives me the most options/variety
4. Has advertisements that, as a consumer, are useful to me
5. Helps me buy the kind of products I want
6. Usually has the product I want
7. GameStop employees make a positive impact on my ability to make the right purchase
=================
SOCIAL QUESTIONS
Social Value – The perceived utility acquired by an alternative as a result of its association with one or more specific social groups. Alternatives acquire social value through association with positively or negatively stereotyped demographic, socioeconomic, and cultural-ethnic groups
Which of the following groups, separated by age, economic status, and race, are most likely to shop at GameStop, in your opinion?
AGE:
Those younger than 12
Those between the ages of 13-18
Those between the ages 18-31
Those between the ages 31-50
Those older than 50
ECONOMIC STATUS:
Those who are lower income
Those who are middle income
Those who are high income
RACE:
Those who are White
Those who are Hispanic
Those who are African American
Those who are Asian American
Other
SOCIAL STATUS
Those who are highly social
Those who are normally social
Those who are normally unsocial
Those who are highly unsocial
1. Does GameStop provide a social value to you as a person?
2. Do you think GameStop is inclusive to your demographic?
a. Regardless, does inclusiveness matter to your choice?
3. Has GameStop’s social value increased to you in recent years?
4. Do you think GameStop is failing to capitalize on demographics that would be naturally favorable to them?
====================
EMOTIONAL QUESTIONS
Emotional Value – The perceived utility acquired by an alternative as a result of its ability to arouse feelings or affective states. Alternatives acquire emotional value when associated with specific feelings or when they facilitate or perpetuate feelings.
1. I feel safe at GameStop
2. I feel accepted at GameStop for who I am
3. I feel GameStop tries to accommodate people who need it
4. I feel GameStop genuinely cares about customer experience and satisfaction
5. I feel GameStop respects and understands my relationship as a consumer with videogames.
6. I feel my purchases at GameStop are worthwhile to me.
7. I feel overall positive emotions when I think about GameStop
8. I feel something would be missing from my game purchasing experience if I shopped elsewhere for my games
======================
CONDITIONAL QUESTIONS
Conditional value – the perceived utility acquired by an alternative as the result of the specific situation or the context faced by the choice maker. Alternatives acquire
conditional value in the presence of antecedent physical or social contingencies that enhance their functional or social value, but do not otherwise possess this value.
Which of the following conditions positively impact your choice to use GameStop versus a competitor?
1. Urgency
2. Desire to save money
3. Interest in used games, game related products
4. Proximity to a store
5. Want new entertainment
6. Frequent sales/deals
7. Require expertise/knowledge for purchase
===================
EPISTEMIC QUESTIONS
Epistemic value – the perceived utility acquired by an alternative as a result of its ability to arouse curiosity, provide novelty, and/or satisfy a desire for knowledge. Alternatives acquire epistemic value through the capacity to provide something new or different.
Do you use GameStop for any of the following reasons?
1. I have never been to a game store and wanted to try one out
2. I am bored of other entertainment options
3. I am curious about specific game(s) available at GameStop
4. I am a frequent buyer/player of games
5. Family/friends recommendation
6. GameStop is convenient for my lifestyle
7. I am interested in specific products available only at GameStop
========================
DEMOGRAPHIC QUESTIONS
1. What is your gender?
Male
Female
2. Age
15-20
21-25
26-30
31-40
41-50
51-70
70+
3. Education Completed
High School
College
Masters
Phd
4. Where do you live?
City
Suburbs
College Campus
Other
5. Monthly Income
$0-$3000
$3001-$6000
$6001-$12000
$12001+
6. Monthly Spending on Gaming
$0-$50
$51-$100
$101-$200
$201+