Strategy and Implementation Summary
Customer service is paramount in the laser tag business. The starting point to accomplishing this is to have a trained and motivated staff that enjoys working directly with the public. It is always easier to please your customers when the facility is spotless and all of the equipment is in proper working order. The center will establish community involvement to demonstrate how the business will contribute to a better quality of life. Community projects using the Laser Tag facility will be developed to help civic groups obtain their financial goals. School, church, and other groups will be welcomed for tours of Laser Tag.
7.1 Competitive Edge
Our competitive edge is that Laser Tag will be the ONLY laser tag facility within 50 miles. Makoto will also offer the community a unique new form of entertainment that will also only be found at Laser Tag. The fact that there are no Family Entertainment Centers in MyTown will give us the unparalleled ability to draw on the overall family entertainment and not just birthday party events.
7.2 Marketing Strategy
Prior to actually opening for business, the principals will invite the local media (print, radio and television) to assemble their own teams to enter a competition of King of Laser Tag. This competition will serve several purposes. The media will naturally cover the event. Their enthusiasm for the game will carry over into advertising done on radio, especially when tied to a live remote broadcast. In order to assure that the actual Grand Opening gathers the desired attention of the community, the plan calls for $5,000 to be spent on advertising for a two-week period before the Grand Opening. Laser Tag will work with the radio stations to be sure that it has live remotes going on during the Grand Opening. We will seek promotional trade consideration with the radio stations, whereby patrons will receive gifts for playing. For example, the first 25 players will receive tickets to see the movie of their choice. The next 25 will receive a free 6″ sub from Subway. These types of promotional trades are routinely done in the local market. Laser Tag will take advantage of these inexpensive ways to get its name out in the community.
Laser Tag will also take advantage of a marketing package that is provided by Zone Systems, the supplier of the laser tag equipment. This package describes the steps to take to assure that a well-executed grand opening program will leverage publicity to obtain extensive free advertising. The approach is to exploit the media’s interest in new and novel businesses. A key objective is arranging live coverage by a TV news show in which representative targeted customers are interviewed while they are enjoying the excitement.
Word of mouth (WOM) spreads fast in the youth market. The grand opening will launch WOM within this market. Managing the ongoing word-of-mouth advertising campaign will involve rewarding players for bringing in friends (with coupons), but the most effective approach is to keep the game exciting and the staff responsive to the patrons. Keeping the games interesting requires that the arena be regularly rearranged so that players discover new features (and hiding places). Keeping the staff responsive requires ongoing staff reminder training that emphasizes their key role in the customer’s entertainment experience.
$5,000 a month is budgeted for ongoing marketing activities that are aimed at the target market. In addition to the dozens of various printing forms (coupons, passes, flyers) available on CD-ROM from Zone Systems, this equipment supplier also provides access to low-cost mail and e-mail lists than can be used to reach the identified target markets. Marketing Creations, Inc., of MyTown will assist with “guerrilla marketing” strategies provided by Zone Systems that are aimed at generating business such as –
- Birthday and other parties in the planned party room followed by reserved playing times in the “Zone”.
- Enlisting the support and cross promotion of popular fast food outlets.
- Engaging the business community in endorsing competitive events.
- Building leagues and growing tournament excitement.
- Winning the cooperation of schools, charities, and other organizations.
- Building Corporate sponsorships.
- Donating games and time to special groups such as children with terminal illnesses and persons with disabilities.
By maintaining a constant presence in the community through league play and parties in the party room, the complex will assure itself of establishing a loyal following. Games and time donated to terminally ill children and others is part of the principals’ belief in their social responsibility. The donation of the party room and game time to disabled children and other worthy groups is not being done with any ulterior motive. The principals believe that people in the community will recognize their actions and be quick to tell others about the good deeds. The kind words said about Laser Tag will help establish itself as a positive force in the community.
Group Patron. Direct mail and broadcast faxes are the preferred means to reach the typical corporate event coordinator. The usual offer is to host team-building parties during which the attendees play laser tag games together. Sports, schools, and other organizations will join the corporate groups to participate with Laser Tag each month.
Public Patron. The “pizza pass” promotion works well to attract the walk-in patron. Arrangements are made with local pizza outlets to attach the Laser Tag coupon to the outside of pizza delivery boxes. When redeemed, a portion of the discounted price is shared with the pizza firm.
The advertising and promotional efforts are projected to draw over 750 people a month from outside the MyTown metropolitan area, drawing on the population of over 56,000 in the eight-county Retail Trade Area.
7.3 Web Plan Summary
Laser Tag’s website will be a resource/information-only area to help build our professional legitimacy.
7.4 Sales Strategy
Laser Tag will provide a venue in which the entire family can enjoy their leisure time, participating in a competitive sport that requires minimum strength and athletic ability. The light exercise will help improve their health, and they will experience a clean facility where the service is the best in the industry, at a fair price.
The management team has determined that the average price being charged for a game at existing laser tag locations is $6.30 per player. In addition, a day’s membership costs an additional $2.33, on average. We will initially set our game prices at $5.50 per player; the average price will be $5 a game, after coupons and specials. This will be a competitive price for the MyTown, Ohio community. Annual membership fees will be $48.00. A $1.00-off discount coupons will be offered through Laser Tag for player members. The average membership fee is the result of an anticipated repeat play by the customers on any given day. The basis for this number was the history of existing laser tag locations in the country.
Peripherals. Video game prices will be set so as to be consistent with the competition. Their range will generally be $0.50 per game. Soft drinks and snacks will be offered behind the counter. Their price will be consistent with area prices and will generally range from $0.50 to $0.75 per item. Laser Tag souvenirs will include t-shirts, sweatshirts, caps, mugs . . . All will include the Laser Tag logo. These are expected to range in price from $7.95 to $29.95. Makoto will be $1.00 for a 2 minute period of play.
7.5 Sales Forecast
The chart and table below show Laser Tag’s projected Sales Forecast. Annual projections for five years are shown here, with first year monthly figures in the appendices.
Laser Tag Revenue Assumptions: Each paid admission or price per game is $5.50. This amount will be occasionally reduced through the use of promotional coupons, quantity discounts, and party package offers. The average price of $5.00 is used in the forecast of sales and revenue.
20 players can plan in the arena at a time. The game, called a mission, lasts for 12 minutes. Allowing time for players to exit the arena, a new mission is possible every 15 minutes. This means that, ideally, maximum revenue per hour could reach $440.
We assume that on an average day, 14 missions will be run with an average of 12 players each. In fact, the weekends will produce the greatest activity and the number of games and players will regularly exceed this average.
Peripherial Revenue Assumptions: 20 video games and pinball machines will be obtained. An average of 10% of capacity at 2 plays an hour are used to estimate potential revenue. $.50 per play is used for sales forecasting, although some machines cost more than $.50 to play. Assuming that each game lasts 3 minutes, 20 games per hour could be played, generating $10.00 in revenue per machine. The maximum revenue for the 20 machines would be $200. A revenue-sharing arrangement will be worked out with a video game distributor who will provide the games. A typical arrangement of 50% for the laser tag center and 50% for the game owner is assumed for these projections. A 5% increase in sales is used for annual projections.
Makoto will generate a separate customer base interested in a new form of entertainment. We assume that Makoto will run at 30% capacity. At $1.00 for 2 minutes, this will average to 15 minutes of play time per day. Maximum potential for Makoto is $177 a day. A 20% increase in sales is used for annual projections due to the uniqueness of this venue.
Soft drinks and snacks were calculated at 10% of total laser tag sales with purchases at $0.75. A 5% increase in sales is used for annual projections.
The following laser tag industry statistics have been compiled by the International Laser Tag Association (ILTA). Laser tag games have been broken down to an overall average and reduced to single months. Increases in sales by approximately 20% from the previous month generally occur for the months of March, August, and December. Decreases in sales by approximately 20% from the previous month generally occur for the months of January, May, and September.
These averages were compiled based on various sources including hundreds of interviews with site operators, surveys by VCI, surveys by the ILTA, and information provided by the manufacturers. All information is believed to be accurate and factual; however, there is no independent way to either confirm or deny the validity to the average plays provided. All numbers should be valid for the purpose of this business plan though variations are quite probable.
On the Second Year Income Statement, all numbers are reduced by at least 10% based on an Industry Trend. The first year sales are always the best sales of the facility due in part to the higher percentage of casual non-discounted customers, the second year sales are “respectable,” and the third year sales drop to approximately 80% of the first year sales.
The change in revenues can be attributed to a variety of factors including:
- In the first year, a new facility enjoys a significantly higher customer base of non-discounted games. The customers are more willing to pay full price once just to try the event if there are no discounts available.
- During the first year most operators have not developed or acquired a customer list for birthday parties, churches, or youth groups. Those groups often have a lower per game price.
- By Year 2, the facility operator has started to market to the Core Market and the casual walk-in traffic slightly diminishes.
The averages plays per month are as follows:
|Stand-Along Laser Tag Centers||5,300 Plays|
|Family Entertainment Centers||4,100 Plays|
|Skating Centers||2,600 Plays|
|Bowling Centers||200 Plays|
Based on this industry data, we assume that the first year will show higher than average laser tag plays due to the uniqueness of laser tag to the MyTown area, and will settle to normal levels once party patrons and members are established.
|Year 1||Year 2||Year 3||Year 4||Year 5|
|Soft Drinks and Snacks||7,086||7,440||7,812||8,202||8,613|
|Total Unit Sales||187,187||188,699||194,084||207,940||223,322|
|Unit Prices||Year 1||Year 2||Year 3||Year 4||Year 5|
|Soft Drinks and Snacks||$0.75||$0.75||$0.75||$0.75||$0.75|
|Soft Drinks and Snacks||$5,315||$5,580||$5,859||$6,152||$6,460|
|Direct Unit Costs||Year 1||Year 2||Year 3||Year 4||Year 5|
|Soft Drinks and Snacks||$0.10||$0.38||$0.38||$0.38||$0.38|
|Direct Cost of Sales|
|Soft Drinks and Snacks||$728||$2,790||$2,930||$3,076||$3,230|
|Subtotal Direct Cost of Sales||$61,165||$61,172||$60,820||$64,281||$67,990|