Evaluation of Market Segment - Term Paper Example

 «Evaluation of Market Segment» Hexin Toys Co. Ltd is a company that has been in existents since 2003. During their 5 years in Existence, they have grown through natural growth. Being the leading toy and games maker has allowed Hexin to introduce a diverse selection of toys and games. However in recent years Hexin has been reluctant to adapt to current market trends. The company was focusing on producing new versions of existing products to make them more convenient. However Hexin was ignoring that other companies were creating similar products that were cheaper and also healthier products. Recently, Hexin realized this trend and began creating toys and games such as school toys, action games. With these new products, Hexin has been able to serve people that have chosen to adapt to the new products. For this purpose Hexin review its marketing plan and tend to increase it sales as well as its gross profit margin. Literature Review (Marketing Philosophies): Marketing philosophy consists of with the five marketing concepts. These five concepts of marketing direct the company to run and to earn profit. Without following these concepts a company cannot reach their goals. These five philosophies of marketing are given described below: 1.1 Production concept: The production concept holds that consumers will prefer products that are widely available and inexpensive. The production concept prevailed from the time of the industrial revolution until the early 1920's. The production concept was the idea, that a firm should focus on those products that it could produce most efficiently and that the creation of a supply of low-cost products would in and of itself create the demand for the products. Product & service satisfy customer’s needs & wants. This emphasis on production & operations dominated until the great depression in the early 1930’s. 1.2 Selling concept: The selling concept holds that consumers and businesses, if left alone, will normally not buy enough of the company’s products unless they are approached and proposed with a substantial selling and promotion effort. Demand for a product is equal to supply. Emphasis is needed to sell the product to increase profits. This matter mainly Focus on personal selling &advertising. Political candidates, selling important, not post consumer satisfaction. Selling concept go through in this cycle, that is product to selling & promotion to profit through sales volume. Selling concept was characterized by a heavy reliance on promotional activity to sell the products, the firm wanted to make. The selling stage, unfortunately overly aggressive selling the “the hard sell”--- & unscrupulous tactics was also involved at a stage. 1.3 Product concept: The product concept holds that consumers will favor those products that offer the most quality, performance, or innovative features. Product also included persons, places, organization &ideas. As example; IBM PC they offer faster system, touch stone screen, ms dos operating system, first 3.5 inch floppy drive, 30%wholesale 40% margin, Hewlett- Packard discovers. This concept very the importance of product & the consumers needs & wants. Marketing Concept: The marketing concept is a simple but very important idea. The marketing concept means that an organization aims all its efforts at satisfying its customer –at a profit. Marketing concepts constitutes with four essential elements. Such as understanding customer’s need, target market, profitability and above all integrated. Marketing concepts guides the whole company effort through developing long and short term marketing plan. 1.5 Societal Marketing Concept: The societal marketing concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well-being. The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often-conflicting criteria of company profits, consumer want satisfaction, and public interest yet a number of companies have achieved notable sales and profit gains by adopting and practicing the societal marketing concept. About Organization: Hexin Toys Co. Ltd. is founded in 1973, specializing in manufacturing and exporting toys, games which are one of the earliest toys manufacturers in Bangladesh. Hexin have two manufacturing bases in Yun He county, and offices in Shenzhen and Yiwu city. Our factories encompass 20,000s.q.meters, with fixed assets of USD2, 500,000. We have more than 300 special machines and equipments for manufacturing toys. We have 500 workers and 50 technology and administrative persons. The company has a strong technology R&D team with rich experience and creative designs, and an administrative team with modern management concepts as well. Under such soft and hard good conditions, a huge amount of products are emerging in endlessly with high quality and competitive prices. Hexin Toys Co. Ltd. involving in more than 3000 kinds of products, including three major sorts’ kid’s toys, adult’s games and educational series. They are detailed in blocks, puzzles, DIY taking apart series, pre-school items, adults intelligent games, promotional gifts and premiums, kids daily using items and etc. Registration & Trademarks: Our registered trademarks are BENHO for kid’s toys and I-WOOD for adult’s games. Customer Analysis: Number of customer: There are approximately 3 million customers (young people), and the number is growing at 10% per year. The estimate in this plan for the Games customer (young people) in our market service area is based on an analysis published four months ago in the local newspaper. Types of customer: Two types of customer existed in this market. One types of customer are seeking for toys. Another types of customers whose are seeking for video games. Customer Decision making process: Customers decision making process has shown by a flowchart below. The customer’s decision making process depends up to two situations. Situation 1 is the most common way to make decision to purchase product, where customer first state his needs then goes to the market and seek related information. After getting information he/she select some alternatives and evaluate them critically. Finally based on evaluation they purchase their product. Situation 2 occurs when customers goes to an opinion leader and based on his/her comments directly purchase the product. Market Analysis: Market Sectors: The main market considered in this report is traditional toys and games. The market can be divided into the following sectors: Infant toys and games. Games (Adult and Educational). Outdoor and sports toys and games Dolls (stuffed toys and teddy bears). Market Trends: Bangladesh is one of those countries where birth of children is in booming situation and also as a developing country it is going with the advancement of technology. Hence children are always very much attracted to toys and youth generations are seeking for new games. It is one of the ideal markets for Toys and games industry. “Last five years are known in this country as baby booming season as over 20% baby takes birth”.1 as the population increases the market is going to be more lucrative for toys and games. Population Trends: The number of children in the Bangladesh population may be regarded as forming the key target market for toys and games. The total number of children within the Bangladesh population has been rising year-on-year since 2003 leading to growth in the younger child population. Expense Trends: Levels of household disposable income have also shown consistent increases since 2003, effectively meaning higher potential spending in the retail market. This has allowed the toys and games market to maintain relatively stable spending levels, despite competition from other sectors, as part of the overall increase in household expenditure. The company has broken its markets into groups according to standard classifications used by market research companies: Games and Toys. Exact definitions of these market segments is not necessary for our marketing planning purposes here; general definitions will suffice as the company knows that games customers tend to be heavy users, wanting high profiled games. The Toy segment’s customers buy elsewhere. It knows that Toy’s customers tend to be minimum loyal, much more likely to need and want handholding, and much more likely to pay for it. Severs surrogate indicators worked behind the choosing of target market. These are: Increasing population. Increasing Demands of toys and games. Increasing income level. Increasing public spending. Baby booming (future market identification). Lucrative market trends. Segmentation: Hexin Toys Co. Ltd has divided its market into two parts. One is toy market another is games market. The segmentation for both parts remains same. It takes age based segmentation strategy for its both parts. Toys Games Age Products Age Products 1-5 Infant toys and games 14-17 Games (Educational & Sports) 6-10 Dolls (stuffed toys and teddy bears) 18-above Games(Educational, Adult and Sports). 11-above Outdoor and sports toys Segment growth: Segment growth2 in Bangladesh market has given below. Traditional Toys and Games (value in BDT), 2004-2008 2004 2005 2006 2006 2008 Value 10,410 12,300 15,176 19,225 25,007 % change 2.032 2.089 3.77 7.203 Segment Structural attractiveness: Toys Games Competitors √ √ Substitute products √ × Buyers Bargain power √ × SWOT Analysis: Strength: Brand Name. Skilled Human Resource. Largest Geographical Coverage. Financial Stability. Huge production place. Weakness: Complicated price structure No long-term Distribution/Channel strategy. High employee turnover. Advertising is not too creative. Opportunity: Increasing population. Increasing Demands of toys and games. Increasing income level. Increasing public spending. Baby booming (future market identification). Lucrative market trends. Economic growth of Bangladesh. Threats: More rigid government regulations. More influence of competitors. Change of government might lead to competitors having more clout Price war. Marketing Objectives 1. Increase sales by 10%. 2. Increase gross margin to more than 15%. Sales forecast (in BDT): Market 2009 2010 2011 2012 2013 total Games 25,000,000 27,500,000 30,250,000 33,275,000 36,602,500 152,627,500 Toys 50,000,000 52,500,000 55,125,000 57,881,250 60,775,313 276,281,563 Total 75,000,000 80,000,000 85,375,000 91,156,250 97,377,813 428,909,063 4p analysis: Toy Games Strategies Direct customers Opinion Leaders Product All Toys All Games Improved Packaging Free Trail Price All Toys All Games Penetration --- Place (Distribution) All Toys All Games Attacking (Flank) --- Promotion All Toys All Games Advertising --- Products: Infant Toys: Infant and pre-school toys and games are products targeting children aged less than 5 years. Products in this sector span a wide range of categories, with two of the main factors in purchasing decisions being developmental learning and character licenses. The packaging of many toys emphasizes how they can be used to aid children’s learning from birth. These learning tools range from simple stimulation offered by bright colors and different textures in hand toys or play gymnasia, to more sophisticated number and alphabet recognition to aid learning at later stages of childhood. Outdoor and Sports Toys and Games Outdoor and sports toys and games include a wide range of products, from footballs to swimming pools. Sales of outdoor and sports products have benefited from concerns surrounding childhood obesity. This has encouraged parents to invest in more garden toys, ranging from expensive items such as trampolines and filter operated swimming pools to swing-ball equipment, swings and climbing frames. Rationale for taking strategies: For its 4p, company takes different strategy. Strategy shall use for both toy and games market along but for its product there is some exception as product choosing process of customers varied some times because of opinion leaders in gaming market. So company provides free trial facilities for opinion leaders in the games market. Market penetration strategy should used because there are several competitors existed within the market. And a higher price war is running into the market and customers are seeking quality good products along with lower price. So to defy the competitor market penetration strategy is well enough. To defend other competitor company choose flank attacking strategy because if suppliers are being captured by the company, competitors are bound to leave the market. Market Positioning: Promotion is the greater way for market positioning. That’s why company decides to increase its promotional activities. Budget for Promotional activities (yearly): Ads 85,000 Catalog 25,000 Mailing 13,300 Promo 16,000 Shows 20,200 Literature 7,000 PR 1,000 Seminar 31,000 Measurement and Comparison Overall, we plan to spend 7.28% of sales on sales and marketing expenses, which seems about in line for our plan, and for our industry. That breaks down to 3.78% of sales for toys, 12.79% for games, and 10.98% for expenses not tied to either one. As broken down by products, we spend about 3% of sales on games, and 16% on service and 23% on training. This breakdown makes sense for our marketing, because of the impact on games programming of better training and better service. Recommendation & Conclusion: The next generation will be more aware about their environment. At the time of purchasing product buyer should think the product comes from the organization, how much environment friendly, what they are doing to protect the environment and how much they contribute to the society and the answer of these question will influence buyers buying decision strongly. Hexin Toy Co. Ltd. should transform itself to a green organization. They may perform social audit and will publish report frequently to the people to capture the market niche. And their marketing strategy might rely with the corporate social responsibility and performing corporate social responsibility, will be a mode of advertisement for the business organization. References: 1) Burro of statistics, 2008, Bangladesh, Dhaka. 2) Arefin.E. 2008, “Bangladesher Putul market”, University press, Dhaka, English road, volume-4, page 38-40. 3) Kotler, Philip & Armstrong, Gary, 2005, “Principles of Marketing, 11th edition”, Printice Hall of India publish Ltd, M-97, Connaught Circus, New Delhi 4) Kotler, Philip & Keller, Kevin,Lane, 2005, “ Marketing Management, 12th edition”, Printice Hall of India publish Ltd, M-97, Connaught Circus, New Delhi. 5) Charles W. L Hill & Gareth R. Jones; 2004, “Strategic Management” Sixth Edition (Indian Adaptation); Kolkata, India. 6) Market segment. Available at. http://www.quickmba.com/marketing/market-segmentation/ 7) Wirth, R.A. 2007. Integrated Marketing Communication. http://www.entarga.com/mktgplan/imc.htm 8) “The Harvard writing style” available in :www.aresearchguide.com/styleguides.html 9) The information about business plan available at : http://www.entrepreneur.com/startingabusiness/businessplans/article38308.html. Read More