Fblt054 International Marketing Management : Assessment Answers

Answer:

Introduction:

There are number of companies who have operated effectively in the toys industry and “Toys R Us” is one of the leading organisations that have operated in the US toys industry for a long period of time. The organisation has successfully been able to gather significant market share in US and it plans to expand its operations in the foreign markets. The present study will take an opportunity to discuss the key aspects of international marketing like macro and competitive factors of the organisation “Toys R Us, the internal business factors of the organisation, the analysis of different foreign markets and justification of a particular choice made. The study will provide effective recommendations for the organisation to make sure its international marketing is effective for the organisation.

1: Analyse the macro and competitive factors that impact global Toys’ Industry

Political: From the political point of view the operation of the toy companies are not restricted as they are comparatively less harmful to the society and hence the organisations could easily continue their operations in the global environment. Even though there are no political barriers but there would be administrative restrictions for instance restrictions to sales of plush toys for children less than three years (Czinkota & Ronkainen, 2013 p, 67).

Economic: Economic environment mainly sees the purchasing and spending power of the consumers. In number of developed countries the demand of toys have increased and in developing economies like India and China the demand of toys have increased and consumers have also increased their interest in spending money on toys for children which definitely contributes to the development of business of different toy companies like “Toys R Us” (Terpstra, Foley and Sarathy, 2012, 71).

Social: The change in the social environment is definitely a huge aspect in the sales and revenue generation of the toy industry and hence it is important to understand the change in the global social environment. The children and young teens are largely inclined towards technology and have been noticed to keep themselves with different technological devices like cell phones, tablets, computers et cetera which has reduced the demand of the soft toys in the recent past and stands to be a huge issue for the toy companies. The emergence of internet and online gaming has created insurmountable pressure which needs scrupulous strategy implementation to mitigate its effect (Berthon et al., 2012 p, 56).

Technological: Technological developments in the global market have been a key issue that the toy companies like “Toys R Us” will have to be face in order to combat the pressure of emerging technology. Emerging technology has largely reduced the need of playing with toys and also the demand in the market. It is also important to mention that the toy companies are integrating technology in their products in order to get the best possible response from the consumers.

Environmental: In the last few years there have been number of cases in Chinese toy factories when huge amount of children toys were pulled back due to the high amount of lead and unsafe magnets which not only affect the environment but also affect the health of the children (Papadopoulos & Heslop, 2014 p, 89).

Legal: Loose safety standards have become an issue for the global toy industry as most of the companies have tussled over patents and copyrights. There have been legal implications for bigger companies like Mattel and MGA. Hasbro and Mattel have caused resentment and hard feelings in the global market which affected their business as well as consumers (Meissner, 2012 p, 89).

The different competitive factors that affect the global toy industry are:

Changing needs of the consumer: The changing needs of the consumers are one of the key competitive factors. Traditional toy companies have been affected by the changing needs of the consumers. Due to the development of the new technology and inclination of people towards technology the market has become highly competitive as companies have focused on providing the best possible product.

Price and quality: Price is another key competitive factor. Most of the companies have similar price and quality which also makes it difficult for the consumers to choose their brand of trust.

Product range: The increasing product range of different companies from the different global organisations has made the market highly competitive (Paliwoda & Thomas, 2013 p, 67).

2: Analyse internal business environment of "Toys R Us" using Porter’s Value Chain

It is important for “Toys R Us” to understand its internal business environment which could be done with the help of Porter’s Value Chain. The value chain analysis will help to discuss the primary and supporting activities which would help the organisation assess its internal environment.

Fig 1: “Toys R Us” Porter’s Value Chain

Primary Activities of “Toys R Us”

Inbound logistics of the organisation involves transport, warehousing, inventory management and control. The organisation primarily receives its bulk of raw materials from North America itself and the ingredients are fairly effective commodities.

Through Operations the organisation mainly tries to understand the future demands and manufacture the final demand which is effective as it helps to have a suitable product mix. However the Toys R Us has been effective in projecting the future demand through an effective analytical approach (Akaka , Vargo and Lusch, 2013 p, 13).

Outbound Logistics is one of the key strengths of the organisation as it has helped the organisation to distribute its products effectively. The organisation has own supply chain and it is also tied up with DHL as a third party distribution source. The company strategises its distribution as DHL is only involved when the distribution pressure is high which helps it to reduce costs effectively.

Marketing and Sale of the organisation is done with successful portfolios and themes. The organisation is focused on developing its marketing mix especially on products, prices, promotion et cetera which has helped the organisation to sale properly (Fletcher & Crawford, 2013 p, 90).

Service and customer reception is one of the main strengths of the organisation and it has been able to grab huge market share through this. The Company “Toys R Us” has been able to provide effective services through its outlets with quality after sale service great customer reception.

Supporting activities of Toys R Us

Firm infrastructure is continuously developed to suit the needs of the organisation. The company focuses on its production capabilities. It is important to mention that the organisation uses IBM solutions in order to maintain its production and accounting management which helps to address several issues regarding firm infrastructure.

HRM is a key supporting activity as this helps the organisation “Toys R Us” to have suitable workforce in place for effective work. Toys R Us focuses on effective customer service for which it is important for the organisation to have efficient and knowledgeable employees in place and the HRM activities helps to do that effectively (Majaro, 2013 p, 76).

Technology development is seen as an important service as it helps the organisation to integrate technology not only in the toys for better response but having a streamlined technological system in place in the outlets and stores have effective impact on the customers. For better product development and production method technology is used for instance enhanced 3D printing.  

Procurement is not only of different raw materials and items but it is also the gathering of different assets and credits. The organisation Toys R Us is focused on developing assets which would help to involve in better production and better opportunities to meet the financial needs of the company. The organisation is focuses on taking credits mostly from banks and other credit institutions in order to operate smoothly (Robertson and Breen, 2013 p, 55).

SWOT Analysis

Strengths

• Rich History and great brand presence.
• Excellent distribution through third party supply chain and direct distribution.
• Strong web presence which is important in the present day market.
• Excellent employees and great customer service.

Weaknesses

• With the shift to online shopping the company is likely to have a cost disadvantage.
• Limited global presence and penetration.
• Lack of proper strategy to combat global competition (Tariq Anwar, 2014 pm 80).

Opportunities

• The joint ventures and strategic alliances with Amazon.
• Effective CSR operations have helped the company to have a social recognition increasing sales and revenue.
• The emerging market opportunities in India and China are extremely effective opportunities for the organisation.

Threats

• Competitive rivalry from Hasbro, Mattel, Toy Wizard et cetera.
• The emergence of online gaming and gaming software.
• Cheap toy development by small and medium scale companies.
• High dependence on the suppliers (Madar et al., 2012 p, 43).

3: Evaluate the potential target markets of India, Sri Lanka, Nigeria and Russia using the 12 Cs framework and then select ONE of the target markets and justify choice

The 12Cs Framework is an extremely effective framework which would help to understand the given markets based on market attractiveness which would help the organisation Toys R Us to pick the right market effectively. The 12Cs framework applied on the given market choices are given below:

Country: The potential target markets available for the organisation are India, Sri Lanka, Nigeria and Russia. It is important to mention Russia is a developed economy and has a established industrial system. It is important to note that the internal turmoil between Russia and US is a significant barrier between trade and business. On the other hand Russia also has some of the leading toy companies operating in its market. On the other hand the Nigeria is a lesser developed nation than Russia, India and Sri Lanka and hence it wouldn’t be a good idea to expand in Nigeria. Nigeria is suffering poverty and other social issues. It is important for the children in Nigeria to get food and proper educational facilities which are much more important than toys. India is one of the bigger economies in the world right now and is developing fast (Woodard, 2012 p, 107).

Culture: Russia is an orthodox culture and condemns western culture. The country is overtly pompous about its culture and hence bringing in foreign culture and similarly influenced goods in the Russian market wouldn’t be a good business decision. The Sri Lankan culture is highly influenced by its traditions and older culture. Even though it is focused on constant development the culture still remains pretty orthodox in the country. It is open to foreign business but still it will try to restrict their operations if it feels it hurts or affects the culture. The local culture of Nigeria is open to foreign business but it is seen that the local culture of the country is largely important for sales and revenue but communication is a barrier and literacy rate still remains a problem in recruiting local people in the outlets. India is a mixed culture and hence strongly supports and welcomes foreign business (Laxhminarayan, 2012 p, 112-113).

Concentration: The concentrations of people living in all these countries are somehow effectively poised. In Nigeria poverty is higher, Russia is more or less equal in terms of wealth, Sri Lanka’s central part is economically developed but given the population of India it becomes the perfect place for an organisation to concentrate.

Communication: Communication is important and these countries have all the available communication networks. India and Russia being large nations have better and well connected communication media whereas Nigeria lacks proper mass media communication. Sri Lanka has proper media channels but India is a bigger media setup which helps the Toy Industry to promote their products effectively in India (Dadwal and Hassan, 2015 p, 31).

Channels of distribution: Different channels of distribution are available for the organisation Toys R Us. The company could adopt a direct distribution strategy or third party distribution.

Capacity: India’s wealth distribution is uneven but people have higher purchasing power which would help the company to sell its products.  Russia’s wealth distribution is even whereas Sri Lanka’s and Nigeria’s wealth distribution is uneven.

Currency: The currency of India and Russia are quite acceptable and also the transaction of hard currency is important whereas Nigeria’s and Sri Lanka’s currency is yet to crawl up in the international map (Bapuji, 2012 p, 88).

Control and coordination: In countries like Nigeria, India and Sri Lanka the international marketer to could exercise huge power whereas in Russia it is limited.

Commitment: The organisation Toys R Us commits to provide quality products and services which is largely embraced by all the given markets.

Choices: It is important to mention that Russia is influenced by its culture whereas Nigeria, Sri Lanka and India are highly influenced even by foreign cultures as well especially India for its mixed culture and hence the organisation might standardise its marketing and product mix while operating in these countries which would lower down costs (Wang and Yang, 2013 p, 76).

Contractual Obligations: Contractual obligations are more or less similar in these markets. These countries are normally friendly to foreign business but India and the other developing markets provide relaxation in contractual obligations.

Caveats: The political condition of India, Russia is more or less same whereas Nigeria and Sri Lanka have tumultuous political environment.  Given the wide market export salesman are highly motivated to work in India and the developing economy of the country is also a plus for Toy companies.

The above discussion clearly shows that among these four markets India is the best choice as per market attractiveness as the country has a huge market where the consumers are willing to pay especially in the target market. The Country is friendly to foreign businesses and is willing to stretch their hands for the establishment of the business in the market (Boone and Kurtz, 2013 p, 99).

4: Recommend to “Toys R us” an appropriate mode of entering the chosen country and justify your choice based on your analysis and theory

The Toy market of India is huge and the competition is not low. There are almost all the top toy companies working in India and hence the competitions in the Indian market have grown significantly in the last few years. In order to enter a market which fierce competition it is important for a company like “Toys R Us” to focus on reaching the consumers faster and cheaper (Auster and Mansbach, 2012 p, 67). It is important for the organisation to keep a low margin for the initial period of time which would help to settle down in the market. In a highly competitive market scenario it is recommended to Toys R Us to mainly focus on choosing the penetration pricing procedure. The penetration pricing procedure is effective for a new entrant in the market as it will help the organisation to set its price a tad lower than the other organisations but not compromising on the quality of the products and services. Companies like Mattel and Hasbro have followed premium pricing which mainly sets the prices higher in the market and hence the penetration pricing would be suitable for the organisation “Toys R Us” in order to capture the market share and make the consumers aware of the brand. Hence it could be concluded that given the market scenario of the Indian Toy market the company Toys R Us should go for penetration pricing by keeping their prices low and the quality of the products similar of better than the other competitors to capture market share (Kasriel-Alexander, 2015 p, 78).

Task 5: Socio-Cultural Factors of India and marketing mix of the organisation 

There are number of socio-cultural factors that affect the Indian Society. Literacy rate is still a tad lower in the country as compared to the other developing nations like China. Education among children is low and hence this makes the next generation of the country vulnerable to different issues related to health and social welfare. Poverty is another socio-cultural factor which prevents people from getting ample education and this increased child labor as well as contributes to unemployment which is a problem in itself for the country. In most of the Indian states Nuclear Family is a trend and this also creates significant educational gap in children and young teens. The ageing population are involved in addiction and domestic violence which is a social issue contributing to the change in culture for the country (Boone and Kurtz, 2013 p, 77).

The marketing mix of Toys R Us is discussed below:

Product: The organisation’s core product is various kinds of soft toys and synthetic toys. The augmented product of the organisation is the attractive design of the toys in the market. Toys R Us will standardise its range of products for the Indian market. The Brick and Mortar games and other traditional toys will be effective to engage the young consumers effectively.

Price: Looking at the Indian market as well as the competition the organisation Toys R Us have developed a penetration pricing strategy which would help to reach the targeted market of the young and first time parents (Auster and Mansbach, 2012 p, 80).

Place: The organisation is highly focused on developing its outlets effectively to attract consumers. The place focuses on the interior décor of the outlet with cultural touch of India which helps to draw the attention of the consumers. It also has an effective website which operates as a virtual store generates significant business for the organisation contributing to the developing culture of online shopping in India. Its strength lies in effective technology integration and hence it develops its virtual market place effectively.

Promotion: The organisation will apply a complete promotional mix through sales discount and added package for the first time parents and existing consumers. It will go on through direct marketing through emails and newsletters, Press Release and mass media advertisement will help the organisation to reach the Indian consumers effectively (Woodard, 2012, 23).

Conclusion:

Toys R Us is a bigger toy company entering India. It is important for the company to keep in mind the socio-cultural factors like poverty and lack of education while developing its products and framing its prices accordingly. The present study has discussed all the key aspects of international marketing which has helped to cover up the objectives of the study.

References: 

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