Case Study on ToyEdu. Creating Business Opportunity - Essay Example

?Creating Business Opportunity Executive Summary ToyEdu is an established company which hopes to create a mark in the toy industry by introducing twonew products which is different from the traditional toys. It is determined to be profitable by the end of fourth year and will have a steep increase in its sales for the first few years. The company believes that their newly launched product will be a trend-setter in the toy industry. Its unique features will create attraction among the children in the initial stages. ToyEdu feels that the more the children can learn the basic educational tips, the more successful the company can be. ToyEdu’s objectives are very clear. It believes that the creative line of products waiting to be launched in the market of the United Kingdom will be the key to success. They wish to adopt strict financial controls that will reduce their operational cost, thus, enhancing their marginal cost. Furthermore, the company wishes to have a unique team of research and development, which will enable them to respond to the customer’s feedback and develop their products accordingly. The business plan that has been outlined in the proposal consists of the marketing and promotional strategy of the company to inform potential clients about the product. It includes few opportunities for the business clients in toy industry who may be interested to buy the patent right of the product. The operational plan has been designed in such a way that will be suitable to meet the demand of both the segments, namely the individual consumers and the business clients. Apart from that, the financial assistance that may be required at the initial stages has also been recognised and recommendations have been made to make them agree to provide financial assistance. Table of Contents 1 Executive Summary 2 Table of Contents 4 Company Profile 5 Market Requirement Analysis 5 Products 7 Marketing Plan 9 Operational Plan 11 Financial Plan 13 Exit Strategy 15 16 16 References 16 Bibliography 18 Company Profile ToyEdu is an ownership company which has been establishing itself as a unique manufacturer of learning toys in the United Kingdom. Though the company is not globally branded, its presence in the UK markets is being felt significantly. The company has been developing toys that can provide certain educational tips to the users. Traditionally, toys were considered as an equipment of amusement for the children. However, in the recent times, toys have been linked with education for creating the view that learning is fun. Thus, ToyEdu is initially targeting the UK markets, before spreading their businesses globally. Consisting of a handful of employees mostly in the manufacturing department, ToyEdu is looking forward to increase its client base all over the United Kingdom. The company claims to have a unique line of products which will be able to attract customers from different age groups. The financial strength of the company is not that strong compared to the competitors. Therefore, ToyEdu wants to see their company on the stock markets of the UK and establish its image as a renowned manufacturer of educational toys in the global markets. Market Requirement Analysis United Kingdom’s market for toys has been growing gradually. Lots of toys are being imported from the Asian countries especially from mainland China as well as Hong Kong (Alibaba.com, 2012). Thus, the potential growth of a company producing toys in and around the UK is assumed to have an impact in the markets comprising of individual consumers and wholesalers. Therefore, a launch of products is intended to be made concerning both the segments. The company believes that their products will be able to attract the individual consumers who are the parents, grand parents and other near ones of a particular child. Additional to the individual consumers, the company also wants to target their products to the wholesalers such as schools, day-care centres and companies who are in the toy industry. It has been decided that traditional approach of distribution will not be followed i.e. manufacturers to wholesalers to retailers. Instead, the product will be positioned differently in two different segments. While this approach will require more work for ToyEdu in generating sales, it will provide a better margin to the company. Additionally, this process might be costly at the initial stages of distribution of the product, it will be cost effective once the relationships with the wholesalers or clients develop. The clients will be familiar with the unique product line that the company has and therefore will demand more, increasing the sales of the product (toyshopuk, n.d.). The different approach of distribution for ToyEdu is considered due to a few of the factors. In fact, the toy industry in the UK mostly has products that are traditionally known as toys. Thus, the proposed business plan intends to focus upon the clients who have been involved in the toy industry but do not have educational toys in their product line up (Hornby, 2012). The sale of product to the individual consumers will be less in volumes but the margin of profit will be higher. Whereas, if the products are purchased by the clients of toy industry, the profit margin might be less but the sales volume will definitely be higher. In addition to it, the sale to direct individuals would help to create strong relationships with the ToyEdu and it would help them to receive feedbacks for development of the product. There are very few competitors in the UK market who are producing educational toys. Though the idea has been generated recently that toys can be linked with education, the companies have not yet come up with products related with learning toys. The sole idea behind these products is to generate certain effects that will attract the kids and make them familiar with learning materials. Therefore, ToyEdu is pretty much assured that their products will be an attractive and innovative aspect to the clients doing business in the toy industry. It also hopes to gradually increase its client base shifting its focus from the United Kingdom to other parts of the world. The company believes that they can grow a strong relationship with both the segments in the market before any competitor tries to invade in the market. They feel that their uniqueness will be recognised by both the segments which are partially helping the guardians to effectively grow their children in the initial stages. Products ToyEdu has decided to launch a few toys that will be focused towards learning for the children. The decision prompted the creative team to develop such innovative product that not only attracts the children but also the parents to buy those for their children. Thus, there has been launch of two products namely Number & Letter toy and Music Simulation toy. The company feels that these toys would not only be useful to engage the children but will also teach them needed skills. The Number & Letter toy is designed in such a way that it will emit light and prompt that character sound which has been touched by the children. For instance, if a child has pressed a letter cube written as ‘5’ then the toy automatically will prompt ‘five’ and a light will glow on the small screen showing the number ‘5’. Similarly, in the case of alphabetical letters the cube pressed will prompt and visualise the same alphabet. With the help of this toy, the children will be able to recognise the different characters that are the base of education. In other words, they will get familiar with the different alphabets and numbers which will be required throughout their educational journey. In addition to this, the toy will increase hand-eye synchronization. It will also help to improve the attention span of the children. The other innovative product launched by ToyEdu is the Music Simulation toy. This toy is designed with a medium sized screen where a dummy of the original Casio is available. The screen has a touch screen facility which enables the children to touch the keypads of the dummy Casio. As soon as the keypads are touched, a tone arising from that keypad is evolved. This toy is meant for a bit grown up child who can understand the objective behind the toy. Music simulation will help the children to grow interest in the field of music. At certain point it will make them attracted as each strokes of different keys will make different sounds. The toy will also make the parents interested as it can be played by them to make the child interested in the toy and in the field of music. Apart from these features, there are few tracks of music saved in the memory installed with the toy. The motive behind this is to save a few of the own created tracks and play the preloaded tracks that will help the smaller child to get engaged at it. The toys would be made available within a very short period of time. Moreover, it can be assured that the toys will not cost much and will be valuable in terms of the price. Apart from that, the launch of the toys will benefit the sales of the company and will attract new clients in the toy industry. The products can become a pacesetter for bringing a dimensional change in the traditional concept of toys. Marketing Plan ToyEdu aims to merge the two competitive edges namely, educational and engineering expertise to manufacture educational toys which will be fun to use and at the same time be important in developing the needed skills for the younger children. Therefore, by identifying and exploiting its core competencies, ToyEdu can be able to quickly gain the consumers attention and develop a reputation for making effective educational toys. Furthermore, the creativeness of the employees in the manufacturing unit will help the company to gain a strong and substantial client base all over the United Kingdom. Essentially, ToyEdu’s competitive edge is the ability to merge education and engineering. Thus, the company will be focusing on their core competencies and try and develop more such products that are in demand in the UK market (Brown, 2007). The marketing strategy of ToyEdu is to emphasize the fact that the company is looking forward to manufacture those products that are based on education and will provide fun to the children. This is an important message because the parents will want their children to play with these kinds of toys that will provide certain needed skills. The main objective behind this kind of toy is to engage the children with the product which is often difficult to conduct with most of the educational devices. The marketing strategy will identify and consider the fact that two different groups of target have been selected for the positioning of the product. Thus, there have been few strategies developed for the two groups i.e. margin of wholesale price to the clients according to the demand of the product and free offers to the consumers who buy in pairs (Ferrell & Hartline, 2010). In addition to the marketing strategies, a strong marketing campaign appealing to the two groups of targets is desired to be prepared. For attracting the individual consumers, it has been decided to place advertisements in a number of the popular magazines based on children. Apart from this, arrival of the new products would also be published through a few of the popular and largely circulated newspapers. However, brief description about the features of the product will be provided in order to attract the consumers to personally visit the stores to be familiar with the feature of the products. Furthermore, a few hoardings in front of the schools, shopping malls and day-care centres will be positioned. It can be said that the advertisements would be attractive and would generate parents’ and grandparents’ interests (Gospe, 2008). In addition to the individuals’ campaign, it has been planned to publish advertisements in the business journals and to create awareness through the corporate websites like Yahoo, Amazon, and Google. Information about the product would be provided in the website of the company and all the necessary information that a client may look for will also be addressed through query section in the website. A contact details form has been attached to the website which will help the company to identify the potential clients that may be interested in their unique line of products (Ryan & Jones, 2011). ToyEdu believes that once the new toy is introduced in the market, it will have a positive impact in the minds of the people. The educational advantage associated with their new toy is unique to the competitors in this industry. The company hopes to attract a larger base of clients but it also desires to explore business prospects with a single and potential client for creating the monopoly atmosphere in the market. Operational Plan ToyEdu’s current workforce is not a huge one but consists of employees those are attached to the manufacturing unit. The company recently hired a line manager whose role is to manage the manufacturing unit (Armstrong, 2006). The manager acts as a supervisor for all the day-to-day activities occurring in the manufacturing process. Thus, the company has urged the need to hire few employees that will be responsible for the sales and the distribution of the newly launched products. Advertisement has been made for looking for management post graduates from the marketing field having an experience of more than two years. The role of these employees will be to persuade the clients about the uniqueness of the Number & Letter toy and Music Simulation toy. Furthermore, the management graduates will be accountable to promote the product in malls and toy stores where the footfall of kids and their parents are more. Apart from the management graduates, the company is looking for external distributors who will be responsible for distribution of the products at the two different segments. The company wishes to outsource the distribution process through external distributors as that will allow it to focus on the development areas. Initially, the sales activity will be handled by the management graduates along with the marketing activities. They will be provided trainings about the product and unique selling proposition (USP) of the two products. The offer that the company is providing will be communicated to them clearly. The client’s profit margin will be designed in a way that will attract them to buy in bulk. The individual consumers’ offer that includes free gifts for buying in pairs is especially designed for families having two or more children around the same age. The employees will be hired in a permanent basis with all the necessary benefits received in the corporate level. Apart from salaries and other benefits the company is intended to offer is a commission of 2% of the sales to the employees. It has also decided to award the employee with the maximum sales over a year. ToyEdu believes that the award and commission will motivate the employees to generate larger sales within a short period of time. The awards will include a few of the most fascinated electronic items such as branded watches, mobile phones and digital cameras. To improve the retention level in the company, it is desired to offer a gratuity amount of ?500,000 to the employees serving their company for more than 20 years. In addition to it, the offer will help to attract new talents from the market who believe them-selves to be creative. ToyEdu is committed to be open to ideas and creative suggestions. Therefore, the company in its official website has spaced a feedback form which is available to all the people who visit the website. Moreover, it has been intended to use the social networking sites, where people can use their creativity to make certain inputs by which the company will be able to rectify any aspect in their products. Apart from the valuable inputs by the individual consumers and clients, the official website wishes to sell the products through online services. The site will consist of two areas, one for the individual consumer and the other for retailers and distributors. Initially, offers would be provided to the individual consumers that the delivery service of the product will be free of cost in spite of the quantity. The retailers and the distributors would be offered to have free service delivery only for a demand of at least 50 units. ToyEdu believes that though the carrying cost needs to be incurred by the company, the products that are sold to the individual consumers have an added profit margin than selling it to the distributors. In terms of incurring cost for the distributors, the company will be capable to generate sales through this strategy. Sales Forecast for 4 Years Financial Plan ToyEdu has been in the toy industry for certain period of time but it has not been able to create a major mark in the United Kingdom market. Thus, the new idea that the company has come up with will require financial assistance for the manufacturing unit. The company has been looking to promote the new products which will require for the recruitment of employees in the sales and marketing field. Thus, the company has decided to approach the financial institutions which will be interested in lending money for the initial costs that will be required pre and post manufacturing of the product. It will be ensured by ToyEdu that the Risk Management Association (RMA) database is designed in a proper way to make the banks and financial institutions secured to provide loans to the company. The RMA provides a clear picture of the company where the liquidated assets and capital details are given. It is a database which ensures the investors that their money will be recovered even if the company fails to return the debt (The Risk Management Association, 2011). ToyEdu wishes to find a potential investor who will be convinced that the new product designed by the company will earn the investor huge profits. The company not only confirms but also assures with fact that their product will be the first in its class, thus giving the investor a chance to have monopoly business for a while. The company assures the investor that the patent product will be introduced in the market under the investor’s company name until their investment amount has been repaid along with the interest and profit sharing ratio mentioned in the agreement between the company and the investor. This attitude will generate a confident impression to the investor about the product that the company is proposing to launch. The strategy will help ToyEdu to use the investor’s distribution and positioning channels in the initial stages to launch the products all over the UK market. Furthermore, it will help the company to initially invest lesser amount for recruiting large workforce in the sales and marketing department. Exit Strategy The owner of ToyEdu wishes to see his company listed in the stock markets of the UK in the future. Therefore, the company would follow the necessary guidelines that are mandatory and mentioned in the accounting regulations. It has been decided that the company will issue public shares which will be able to fetch them the required capital after the investor’s tenure has been completed. If the company becomes renowned for its unique line of products across the global markets, naturally their share value will increase. Therefore, at the time of any financial downturn the company will be able to distribute their shares to the potential buyers and overcome the financial crisis. In the event of any retirement plan by the owner of the company, the shares can be bought by the existing business client and acquire the company (Hawkey, 2002). Apart from the above mentioned reasons, life and death is an unconditional tragedy. Thus, in the event of death of the owner of ToyEdu, the ownership will be transferred to the other potential family member. He/she will be accountable for all the assets and liabilities that will remain after the death of the original owner. In case the family member is not willing to take the possession responsibility, the company will sell its whole business unit at the current value of that time. In addition to it, the family member has to be provided 15% equity in the buying company which will allow him/her to earn dividends even after the sale of the whole business unit. References Alibaba.com, 2012. Supplier Location. Other Educational Toys. [Online] Available at: http://www.alibaba.com/products/uk_toy_market/--100001653.html [Accessed April 21 2012]. Armstrong, M., 2006. A Handbook of Human Resource Management Practice. Kogan Page Publishers. Brown, J., 2007. The Competitive Edge: How to Win Every Time You Compete. Tyndale House Publishers. Ferrell, O. C. & Hartline, M., 2010. Marketing Strategy. Cengage Learning. Gospe, M., 2008. Marketing Campaign Development: What Marketing Executives Need to Know About Architecting Global Integrated Marketing Campaigns. Happy About. Hawkey, J., 2002. Exit Strategy Planning: Grooming Your Business for Sale or Succession. Gower Publishing, Ltd. Hornby, 2012. Shop. You Are Here: Shop. [Online] Available at: http://www.hornby.com/shop/ [Accessed April 21 2012]. Ryan, D. & Jones, C., 2011. The Best Digital Marketing Campaigns in the World: Mastering the Art of Customer Engagement. Kogan Page Publishers. The Risk Management Association, 2011. The RMA Journal. Our Mission. [Online] Available at: http://www.rmahq.org/ [Accessed April 21 2012]. Toyshopuk, No Date. Educational Toys. Toy Categories. [Online] Available at: http://www.toyshopuk.co.uk/educational/ [Accessed April 21 2012]. Bibliography Frey, R. S., 2008. Successful Proposal Strategies for Small Businesses: Using Knowledge Management to Win Government, Private Sector, and International Contacts. Artech House. Tennant, G., 2002. Design for Six Sigma: Launching New Products and Services Without Failure. Gower Publishing, Ltd. Read More