Marketing Plan Business Proposal for a Video Game 3000 words

BUSINESS PROPOSAL for “The game of Guerdon



Section I. Executive Summary


This paper presents a business proposal for the business which aims at developing a new video game titled: “The game of Guerdon”. The business aims at targeting children of primary school age. The decision to target this group came as a result of a gap identified in the market for video and computer games. It was discovered that this age group has no video game that actually targets them. Based on interviews with parents it was revealed that parents basically find it difficult to locate a right game for their children. The business requires a start-up cost of £13,030,000. The business anticipates making sales of £5,000,000 during the first year and a pre-tax profit of £1,000,000. Sales are expected to grow at a constant rate of 20% over the first five years of operation. The business is expected to begin as a partnership. After the first five years, the business intends to go public, that is, issue shares in an initial public offering (IPO) and transform into a public limited company. By then it will go into other businesses.




Section II: Business description


BUSINESS PROPOSAL for “The game of Guerdon


1.0   Introduction of Business Idea


The core concept of this business is to offer an online competition based game(s) to primary school age students, where the games are focused on developing specific cognitive skills and students are motivated to play these games by competing against one another. For added incentive they can earn   rewards based on their performance. The type of rewards that kids can earn could range from  $5 ITunes vouchers/Time Zone vouchers to discounts vouchers at kid friendly restaurants such as MacDonald’s or Pizza hut. In addition rewards/prices could include toy figurines and dolls. The reward scheme will be developed in response to research on preferences of primary school age children.

We will work with a team of doctors (neuroscientists & child psychologist) and specialist in education and kid’s entertainment in the development of these games.  These games will need to be FUN as well as EDUCATIONAL and we will need computer programmers to implement and support this online game. Skills to develop in primary school age children – Maths, science,  physics, foreign languages, writing & spelling as well as test memory and general knowledge.  The games will be “fun” as they will follow current trends/preferences in primary school age children.

CASH INFLOWS & OUTFLOWS – Parents would registers their children on the online game and when they do they will have to pay for their annual membership, in advance. Once the site has substantial members, we plan to approach (non-competing) organisations for advertising opportunities on our website. 

For each new member – we would donate $x towards primary schools in different communities. Some percentage of annual membership fees would be allocated towards rewards for children. As part of the reward initiatives we will also contact large organisations with view to obtaining discounts/vouchers from them.  Such sponsorships should generate positive PR for them and those vouchers will also increase their sales because customers (children and their parents) will attend those establishments in order to exchange the vouchers and they may be willing buy some additional products from sponsoring organisations.


What is already in the market or Market Analysis?


Name of ProductOnline presenceTarget age groupFocus of the game Does this game MOTIVATE kids to play and learn. Why or why NOT ?
Nintendo DS’s Brain ageNOAdult ( 18+)Maths, logic, alphabet and memory.


Maybe but targeted more at adult (who want to increase their mental activity levels & protect against Alzheimer type diseases) 


3-17+Math   Language Arts   Science

History   Music   Geography

Art   Technology   Physical Education

NO, website is very bland in colour and lack the “fun” factor required to keep kids engaged.
Primarygames.comYES Language art, math, science, social studiesNo, has very outdated games and these is no reward to play
theproblemsite.comYESpreschool children- high school studentsMath, programming, memory, spellingNo, has very outdated games and these is no reward to play


Children’s’ behaviour.

It is a responsibility game for infants

YES, BUT it targets infants not for primary school age students


Based on the above analysis, it’s clear that these is a gap in the market for an innovative online approach to developing cognitive skills of primary school children, through a means that motivates them to learn. “Computer games satisfy children’s learning needs and motivate them to learn” [1] and learning in a computer game environment brings greater relevance to the subject for children”. “They particularly liked games that would progressively become more challenging.” Hence the focus of our business will be to research and deliver a reward system linked to online education that has relevance to primary school age children, filling a gap that current exists in online games on the internet.

2.0   What Gap/Needs is this business fulfilling


Our research indicates that a significant percentage of parents of primary school children are concerned about their cognitive development. “According to ACNielsen, the leading global market information company, in a survey recently conducted amongst adults with primary school children, 52 percent of parents were quite concerned about their children’s IQ development and ranked it at least eight marks out of 10 in terms of importance.” [2] This survey also revealed that more than half of parents interviewed have admitted to “purchasing products claiming to be able to make their children cleverer”. And the higher price tag associated with these products did not act to “discourage parents from buying them”.  Ironically, only 1 in 10 parents reports that despite their willingness to purchase such products they didn’t believe that it actually helped to increase their children’s cognitive skills. Such reports prove that there is a market for these type of products and one where a premium can be charged.

Furthermore this business is addressing the concern that parents often feel that children are spending too much time on the internet and not enough time involved in educational activities.  One recent research[3]  focused primary school children revealed that “95.7% reports using the Internet and 62.9% of them report a daily use to three times a week. Most pupils (91.2%) report to have access to the Internet at home.” And “61.8%” use the internet to play online games at home”. Such figures indicate a substantial opportunity to reach and engage primary school age children in more educational  games by innovatively engaging them though the notions of competition with other online players and meaningful rewards.

Now the Requirements of the report:



Section III: Marketing

A Research and analysis

  • Target market (customers) identified

Our target consumers include children of primary school age. This age group ranges from 4 – 11 years old[4]. This product will not be targeted only to this age group. We intend to target the parenting age groups as well. This is because; it is the parents themselves who will buy the games for the children. Parents always wish the best for their children and would be even more interested in understanding how the game operates.

  • Market size and trends


The UK video game market is worth approximately $6billion based on 2008 sales[5]. This represents a compound annual growth rate of 23%. The market is said to have doubled in size over the past 5 years. This indicates that sales in 2004 stood at approximately $3billion dollars[6]. Reports say that this growth in the market is as a result of increase sales of Nintendo’s consoles and software[7]. Based on the compound annual growth rate of 23%, it means that sales over the last five years have been as follows:


YearSales ($billions)

Source: Based on 2008 sales of $6billion and a compound annual growth rate of 23%.


The games market size trend in terms of sales is therefore as follows:



Figure 1: UK Video Games Market (Sales Trend – 2004 – 2008).












Source: Calculated based on a sales figure of $6billion in 2008 and a compound annual growth rate of 23% over the last five years.


The growth in the market has reduced as compared to the growth over the five year period 2001 to 2006. The market grew at 26.8% during the period 2001 to 2006[8].


  1. Competition

Main industry Players include Microsoft, Nintendo and Sony. Latest products launched by these companies include Xbox 360, Nintendo Wii, and Play Station[9]. Microsoft’s Xbox 360 was launched in 2007 and it competes with Nintendo’s Wii and Sony’s Playstation 3 consoles which have been in the market for about one and a half years[10].


  • Estimated market share


We anticipate gaining a market share of approximately 5% during the first year of operations. We expect this market share to grow to about 20 percent over the next five years.

B Marketing plan

  • Market strategy — sales and distribution

We anticipate making sales of approximately £5,000,000 in year 1 and we expect this sales to grow on a year-on-year basis by 20 percent. Our distribution will be done mainly through internet. The internet is widely accessible to most people today including primary school children. As a result we will focus attention on marketing the product through the internet so as to get a wide geographical coverage. However, we will also develop some of the games and distribute them physically so as to meet the objectives of those customers who are not comfortable using the internet.

  • Pricing

We intend to sell at the lowest profitable price. To determine this price, target costing will be employed. Research will be conducted on the possible price customers may be willing to pay. Research will also be conducted on the quality they are willing to get. Based on this price and quality we will set a target profit. The target price and the target profit will be used to calculate a target cost. We will do everything possible to ensure that we do not exceed the target cost. If the price the customers are willing to pay turns out to be too low such that we cannot cover our costs, we will try to make them understand that our products are of a high quality. This will be done by communicating the functionalities of our product to customers.


  • Advertising and promotions


Our product will be advertised and promoted using a number of methods including the internet, the TV, newspapers and other media. We will also promote the product by distributing flyers, organising talk shows etc. Celebrities will be used to promote the product. This is because children tend to believe so much in anything that celebrities use.

Section IV: Operations

  1. Location

The business will be located in Birmingham, West Midlands. This is the part of the UK where most industries are located.

  1. Advantages

The advantage for locating in Birmingham are that many companies are located in the region. We expect to benefit from skill over effects from technology, well trained workers etc.

2   Zoning


3   Taxes

The UK has one of the lowest tax rates in the EU. We will therefore be producing at a lower cost than other manufacturers producing in other countries.

B Proximity to supplies

Given the high presence of other companies in the region, it is likely that suppliers are also highly located in the region. Thus we will be able to quickly source inputs for our business operations.

C   Access to transportation

The region has a good transport network including roads, rail and air. The road network is not too congested. This will enable fast and easy flow of materials and finished goods to and from the factory.

Section V: Management


A Management team — key personnel


Our key management personnel will include a designer, an engineer, an IT specialist, an Accountant, a management Accountant, a Financial Manager, a Marketing Manager, a Sales Manager, etc. To ensure success, these personnel will collaborate with each other to ensure that the project is successful. For example, the Marketing Manager will have to work in close collaboration with the financial manager and the management accountant to determine the price, cost and number of units to produce.


B  Legal structure — stock agreements, employment agreements, ownership


There are a number of legal structures of a business. These include the sole proprietorship, the partnership, and the public limited company. The sole proprietorship is owned by a single person, the partnership by two or more partners and the public limited company by a group of shareholders. The business will start out as a partnership. A maximum of 3 partners will contribute capital to the business and their ownership of the business will be proportionate to the amount of capital contributed.  The partnership will be a limited partnership. This means that partners’ liabilities will be limited to amount of capital contributed to the business. If the capital contributed by the partners is not enough to fund the operations, additional funding will be obtained by issuing shares. We intend to change the legal structure into a public limited company when it achieves a certain level of growth. This will be done by inviting the public to buy shares through an initial public offering (IPO).


C Board of directors, advisers, consultants

The board of directors will be different from the management. It will constitute the partners who will be separated from the management of the company. Board of directors will seek the assistance of experts in the business field to provide them with advice on whether the management are acting in the best effort of the owners – the partners.

Section VI: Financial

Financial forecast

  • Profit and loss

To come up with a profit and loss account, we need to forecast sales, operating costs and other expenses. We also need to forecast taxes and interest expenses. In making the profit and loss account we assumed that the company will generate sales of £5,000,000 during the first year. We expect these sales to grow at a constant annual rate of 20% over the next 5 years. We expect sales driven expenses such as cost of sales, and other operating expenses to remain at a constant percent of sales. Variable costs are expected to remain constant at 6% of sales.

Profit and Loss Account.

Variable Costs of Sales03,000,0003,600,0004,320,0005,184,000
Operating Profit02,000,0002,400,0002,880,0003,456,000
Fixed Costs£1,000,0001,000,0001,000,0001,000,0001,000,000
Profit before tax-1,000,0001,000,0001,400,0001,880,0002,456,000
Tax (@ 30%)0   300,000   420,000   564,000   736,800
Profit After Tax0£1,500,000£1,800,000£2,160,000£2,592,000
  • Cash flow

Cash Flow Statement

Profit after tax£1,500,000£1,800,000£2,160,000£2,592,000
Add back Depreciation150,000150,000150,000150,000
add back amortisation10,00010,00010,00010,000
Less Working capital investment(250,000)(300,000)(360,000)(432,000)
Fixed Capital Investment(250,000)(300,000)(360,000)(432,000)
Free Cash Flow from Operations£1,160,000(1,360,000)£1,600,000£1,888,000

Depreciation is expected to be 10% straight line on property plant and equipment valued at £10milion. Amortisation is on the software obtained by the company which is capitalised as a noncurrent asset. The software valued at 2,500,000 is to be amortised at 10% annually. Working capital is expected to be 5% of sales. Likewise, we expect fixed capital investment to be 5 percent of sales annually.


  • Break-even analysis


YearOutputFixed costsVariable costTotal costsTotal Revenue


Figure 2: Break Even Chart












The table above shows the anticipated output, fixed cost, variable cost, total cost and total units. Figure 2 shows the breakeven chart obtained by plotting total revenue and total cost as a function of output. It can be seen that the break even units are about 25,000 units. This means that the company needs to produce and sell at least 25,000 units before it can start making profit.


  • Cost controls

As earlier mentioned above, the company will price its products using a target costing approach. This involves setting a target profit and price and working towards meeting the cost. To achieve this, various cost control procedures will be applied throughout the organisation. Total quality management will be adopted across all areas of the organisation to ensure that defects are kept to a minimal level. Wastes will be carefully managed. Long-term relationships will be established with a number of suppliers and procedures will be put in place to ensure that raw materials are supplied to us at the lowest prices possible.


  • Budgeting plans

The following is a breakdown of the start-up costs.


Start –up expenses1,000,000
Computer equipment30,000
Factory Machines10,000,000
Furniture and Fittings700,000
Motor Vehicles500,000



Section VII: Critical risks

A  Potential problems

The potential problems that may arise include the following. The business may find it difficult to raise the necessary funds through borrowing. As such it may be difficult to continue with the start-up of the project. Other problems may come as a result of licensing. Operating in the video game industry requires licensing as well as the use of proprietary software. If we are not granted a licence we may be unable to operate. Moreover, we may not be granted permission to use proprietary software. If this be the case, then we may be unable to operate. Operating in the video game industry also requires specialist techniques. We need to be able to attract and recruit the right people to do the job. We may be unable to recruit the right people if such talent is not available. Moreover, the case may even become very difficult if labour market rules restrict us from recruiting labour from abroad.

B Obstacles and risks

Like any business, our business is subject to a variety of risks including business and financial risk. Business risk arises as a result of high levels of fixed costs as compared to variable costs. This may result from increase short-term borrowing, which may help to increase short-term borrowing. Financial risk is the risk that we may be unable to meet our long-term financial obligations as they fall due. This may lead us into financial distress and subsequently into bankruptcy. Other risks include interest rate risks and foreign exchange risks. Interest rate risks are the risks that fluctuations in interest rates may lead to an increase in the amount of interest that we pay on borrowed funds. Even if borrowing is done at fixed rates, interest rates may still pose risks. This may be the case if interest rates fall significantly below current rates when we had taken out long-term loans at higher rates and for which prepayment is precluded. Exchange rate risk is risk that arises from fluctuations in currencies. This has to do with our cash flows, business operations and contracts that are denominated in foreign currency. Given the globalised nature of business today, it is difficult to operate with a single currency. Consequently we are subject to currency risk.


C  Alternative courses of action

Based on the above problems and risks, the company intends to put in place a number of strategies to enable us overcome the above risks, problems and obstacles. We intend to enter into futures, options, swaps and forwards contracts to enable us hedge against interest and exchange rate related risks. We will also search out the most recent technology required by the video game industry and send staff for training on this technology.


Section VIII: Harvest strategy


A Transfer of assets

The business will be transformed into a public limited company after the first five years of operations. Assets will be transferred from the old business – the partnership to the new business, the public limited company. Partners will be granted shares in proportion to the amount of assets transferred.

B  Continuity of business strategy

As earlier stated above, the business will remain and continue operating as a going concern after the first five years. The business will be continued as a public limited company. Investors will be offered shares in an IPO.

C Identify successor

As earlier mentioned, we do not intend to sell the business. We intend to continue as a going concern but under a different legal structure. In this case the successor identified would be the shareholders of the company who would be offered shares in exchange of capital contributed to the business.

Section IX: Milestone schedule


A Timing and objectives

We expect the business to be fully operational as from December 2009. We expect to make sales of at least £5,000,000 during the first year of operation and to make a pre-tax profit of £1,000,000. We also intend to start breaking even during the second year of operations.

B  Deadlines and milestones

The following deadline and milestones are anticipated:


20 June 2009                                                   Registration of Company

25 June 2009                                                   Obtain license to operate the Video Game Business

1st September 2009                                         Obtain permission for all proprietary software required to run the business

1st October 2009                                             Get a location for our business

31st October 2009                                           Transform Location to suit our business needs

1st December 2009                                          Launch the business to take advantage of Christmas sales


C  Relationship of events





Agnus Hui (April, 2005), ACNeilson, Last viewed on the 15th of March 2009, URL:

BBC (2009) “Schools – Primary Ages 4-11” retrieved from: on the 18th April 2009.


Breckon (2009) “Japanese Game Market Shrinks 15 Percent As UK Industry Records Huge Growth” retrieved from: on the 18th April 2009.


Kamran Sedighian and Andishe Sedighian (1997), “Can Educational Computer Games Help Eucators Learn About The Psychology Of Learning Mathematics In Children?” Department of Computer Science, The University of British Columbia


Thomson Reuters (2009).“ U.S Video Game Industry Growth Seen Slowing”. Available online at:


Valcke, M, Schellens, T, Van Keer, H, Gerarts, M, (2007)  ,” Primary school children’s safe and unsafe use of the Internet at home and at school: An exploratory study”, published in the Computers in Human Behavior; Nov2007, Vol. 23 Issue 6, p2838-2850, 13p


Verdict Research Ltd (2006). “UK Video Games and Consoles Retailing 2006”





[1] Kamran Sedighian and Andishe Sedighian (1997), “CAN EDUCATIONAL COMPUTER GAMES HELP EUCATORS LEARN ABOUT THE PSYCHOLOGY OF LEARNING MATHEMATICS IN CHILDREN?” Department of Computer Science, The University of British Columbia

[2]  Agnus Hui (April, 2005), ACNeilson, Last viewed on the 15th of March 2009, URL:

[3] Valcke, M, Schellens, T, Van Keer, H, Gerarts, M, (2007)  ,” Primary school children’s safe and unsafe use of the Internet at home and at school: An exploratory study”, published in the Computers in Human Behavior; Nov2007, Vol. 23 Issue 6, p2838-2850, 13p

[4]BBC (2009) “Schools – Primary Ages 4-11” retrieved from: on the 18th April 2009.

[5]Breckon (2009) “Japanese Game Market Shrinks 15 Percent As UK Industry Records Huge Growth” retrieved from: on the 18th April 2009.

[6] Ibid

[7] Ibid

[8] Verdict Research Ltd (2006). “UK Video Games and Consoles Retailing 2006”

[9]Thomson Reuters (2009).“ U.S Video Game Industry Growth Seen Slowing”. Available online at:

[10] Ibid