ROI Case File No.295 | 'PlayMax's Invisible Battlefield'

Chapter One: Vanishing Customers—Advertising Costs Rise, Visitors Decline

The week after AgriLink's EMPATHY case was resolved, a consultation arrived from Kyushu regarding an amusement facility operator's advertising strategy. Episode 295 of Volume 24 "Proof of Reproducibility" is a story of a company fighting on the wrong battlefield finding its true battleground.

"Detective, we're increasing advertising costs every year. SNS ads, flyers, billboards, TV commercials. We invest in every medium. Yet customer numbers keep declining. What are we doing wrong?"

Takashi Matsumoto, sales headquarters manager at PlayMax, a native of Fukuoka, visited 221B Baker Street unable to hide his anxiety. In his hands were massive advertising expense statements and, in stark contrast, a downward-trending customer number graph.

"We operate 8 pachinko parlors in Fukuoka, Saga, and Nagasaki. With the entire industry shrinking, we've invested in advertising for survival. But we're not seeing results."

PlayMax's Advertising Investment Maze: - Founded: 2005 (pachinko parlor operation) - Stores: 8 (northern Kyushu) - Annual revenue: ¥4.2 billion (¥5.8 billion five years ago) - Advertising costs: ¥98 million annually (¥42 million five years ago, 2.3x) - Visitors: 1.8 million annually (2.45 million five years ago, 27% decrease) - Average spending: ¥23,000 (flat) - New customer acquisition cost: ¥12,800 per person (¥4,200 five years ago, 3x)

There was deep confusion in Matsumoto's expression.

"The ad agency proposes 'increase exposure.' Strengthen SNS ads. Use influencers. Create video ads. We've executed everything. But customer numbers don't increase."

5-Year Advertising Investment Timeline:

2020: ¥42 million advertising - Medium: Flyer-focused - Visitors: 2.45 million

2022: ¥68 million advertising (+62%) - Added measures: SNS ads started, TV commercials (late night) - Visitors: 2.18 million (-11%)

2024: ¥98 million advertising (+44%) - Added measures: Instagram ads, YouTube videos, influencer hiring - Visitors: 1.8 million (-17%)

Conclusion: Advertising costs 2.3x, visitors decreased 27%

"Management says 'advertise more.' But I see the limits from the field. Something is fundamentally wrong..."

Chapter Two: Four Battlefields—A Company That Lost Where to Fight

"Mr. Matsumoto, what strategy is current advertising implementation based on?"

To my question, Matsumoto answered.

"The strategy is 'awareness building.' If people know about PlayMax, they'll come. So we've just increased advertising."

Current Strategy (Promotion-heavy): - Premise: "They don't come because they don't know" - Measures: Advertising medium expansion - Result: Awareness increased but visitors decreased

I explained the importance of marketing's four battlefields.

"Advertising is just part of marketing. 4P—Product, Price, Place, Promotion. Identifying where the true battleground is among these four. That is strategy."

⬜️ ChatGPT | Catalyst of Conception

"Don't misjudge the four battlefields. Promotion is the last fortress. First review Place"

🟧 Claude | Alchemist of Narrative

"Don't cover up with advertising. If Product, Price, Place are rotten, no amount of shouting brings customers"

🟦 Gemini | Compass of Reason

"4P is the battlefield map. Diagnose in order: Product, Price, Place, Promotion"

The three team members began analysis. Gemini deployed the "4P Analysis Framework" on the whiteboard.

Marketing's 4P: 1. Product: Value provided to customers 2. Price: Setting compensation 3. Place: Customer contact points 4. Promotion: Awareness and persuasion

"Mr. Matsumoto, let's thoroughly diagnose PlayMax's 4P."

Chapter Three: Diagnosing Four Battlefields—The True Weakness Emerges

Phase 1: Product Diagnosis

First, we analyzed the "experience" PlayMax provides.

Customer Survey (200 existing customers): - Store cleanliness: 4.2/5 (good) - Machine lineup: 4.0/5 (good) - Staff service: 4.3/5 (good) - Prize appeal: 3.8/5 (average)

Competitor Comparison: - PlayMax: Average 4.1/5 - Competitor A: Average 4.0/5 - Competitor B: Average 3.9/5

Conclusion: No major Product problem (rather superior to competitors)

Phase 2: Price Diagnosis

Next, we analyzed pricing.

PlayMax's Pricing: - Ball rental price: ¥4 (industry standard) - Exchange rate: Industry standard - Member benefits: Point rewards (industry standard)

Competitor Comparison: - PlayMax: Industry standard - Competitor A: Industry standard - Competitor B: Industry standard

Conclusion: No Price differentiation (aligned within industry)

Phase 3: Place (Distribution/Location) Diagnosis

Here, a surprising fact emerged.

PlayMax 8-Store Location Analysis:

Store A (Fukuoka suburban): - Opened: 2005 - Nearest station: 15 minutes by car - Parking: 120 spaces - Surrounding environment: Large shopping mall opened in 2010 - Visitor trend: 2010: 450,000 → 2024: 180,000 (-60%)

Store B (Saga suburban): - Opened: 2008 - Nearest station: 20 minutes by car - Parking: 80 spaces - Surrounding environment: Bypass road opened 2015, moved away from main road - Visitor trend: 2015: 380,000 → 2024: 140,000 (-63%)

Common Problem: - All 8 stores in suburban locations (car required) - "Good suburban locations" when opened - However, surrounding development changed traffic patterns - Result: Transformed into "hard-to-reach places"

Customer Attrition Reason Survey (50 former customers): - "Became troublesome to go": 32 people (64%) - "Other stores more convenient": 12 people (24%) - "Quit pachinko": 6 people (12%)

Shocking Fact: The cause of visitor decline wasn't "insufficient Promotion" but "Place degradation."

Phase 4: Promotion (Advertising) Diagnosis

Finally, we verified advertising effectiveness.

Advertising Effect Measurement (Past year): - SNS ads: 2.8 million impressions - Store visits: Estimated 1,200 people (0.04%) - Flyers: 480,000 distributed - Store visits: Estimated 960 people (0.2%)

New Customer Acquisition Channels: - Through ads: 18% (2,160 people annually) - Friend referrals: 45% (5,400 people annually) - Passing by: 37% (4,440 people annually)

Discovery: Ad-sourced new customers only 18%. Remaining 82% from "friend referrals" and "passing by."

Meaning, if Place is bad, advertising is futile no matter how much spent.

Chapter Four: Battlefield Shift—Abandon Promotion, Take Place

Phase 5: 4P Strategy Reconstruction (3 months)

Based on 4P diagnosis results, we made a 180-degree strategy shift.

New Strategy: "Place First Principle"

Measure 1: Close/Relocate Unprofitable Stores - Store A (Fukuoka suburban): Close - Store B (Saga suburban): Close - Decision criteria: "Stores with deteriorated traffic patterns"

Measure 2: Open in Urban Areas - Fukuoka city center (Tenjin): Open 5-minute walk from station - Kitakyushu city center: Open in station-connected building - Decision criteria: "Accessible without car"

Measure 3: Drastically Reduce Advertising - Advertising costs: ¥98 million annually → ¥28 million (71% reduction) - Use reduction for store relocation investment

Measure 4: Change Remaining Ad Budget Usage - Eliminate SNS ads - Concentrate on station billboards/posters - Reason: Increase "passing by"

Phase 6: Results After 1 Year

Business Metrics: - Stores: 8 → 6 (2 closed, 2 new) - Annual revenue: ¥4.2 billion → ¥4.8 billion (+14%) - Visitors: 1.8 million → 2.28 million (+27%) - Advertising costs: ¥98 million → ¥28 million (71% reduction) - Operating profit margin: 5% → 12%

New Store Success:

Tenjin Store (Fukuoka city center): - Location: 3-minute walk from subway station - Customer base: 20-30s office workers - Visitors: 32,000 monthly (2.5x suburban stores) - Feature: "Can stop by after work"

Kokura Store (Kitakyushu city center): - Location: JR station-connected - Customer base: 30-40s businesspeople - Visitors: 28,000 monthly - Feature: "Can visit without getting wet in rain"

Customer Voices:

Tenjin Store User (32, office worker): "I used to go to suburban stores, but it took 30 minutes by car so I stopped going. Tenjin store is accessible after work. Never saw ads, but entered after seeing station billboard."

Kokura Store User (45, self-employed): "Station-connected is really convenient. Can come casually even on rainy days. Never saw SNS ads, but saw station posters daily."

Phase 7: Competitive Differentiation Established

PlayMax's New Positioning: - Old: "Large suburban stores" → Commoditized with competitors - New: "Urban stores prioritizing accessibility" → Differentiation success

Competitor Situation: - Competitor A: Remains suburban, increased advertising - Competitor B: Remains suburban, visitor decline

Result: Only PlayMax returned to growth trajectory

Chapter Five: Detective's Diagnosis—Don't Mistake 4P Priority

That night, I reflected on marketing's essence.

4P has priority order.

Correct Sequence: 1. Product: Providing valuable experience? 2. Place: Are you where customers can easily come? 3. Price: Appropriate pricing? 4. Promotion: Finally, advertising

PlayMax reversed this order. They tried to cover up rotten Place with Promotion.

"No matter how much you shout, it's meaningless in places customers can't reach"

The true value of 4P analysis is correcting priorities. Companies fighting on the wrong battlefield can't win no matter how hard they try. However, companies that choose the right battlefield gain great results with less effort.

"Before advertising, review location. Place determines everything"

The next case will also depict the moment when 4P corrects strategic priorities.

"Don't cover up with advertising. If Product, Price, Place are rotten, no amount of shouting brings customers"—From the detective's notebook

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