Market Analysis for ITS Toy Business - Essay Example

? Number April 9, Market analysis for ITS toy business I. Industry Toy manufacturing Industry, is valuable for anyone who wants to invest in the toy manufacturing industry. The census bureau reports that other goods and services have increased in the Boston area by 2.6 % from 2010 to 2011. Toys sales are on the rise in the area. We wish to place our first store in or around the Boston area. ITS will be providing a service for mothers and children by creating an aisle with educational toys at lower prices. Organic toys that are safe and healthy for small children will be to ITS advantageous. Just as organic foods are becoming more and more popular this market analysis will show a direction of market growth for organic toys for mothers and children. ITS toys will be safe for toddlers to put in their mouths and the dyes and paints, made from organic materials that are childproof. Poisoning of from our toys will not be an issue from our company. This will get rid of the problem of consist recalls done other toy manufactures. The supply of our toys will come from vendors that use only the organic brand of paints and dyes. Our company needs to describe our organization that is totally customer oriented. We want our customers to know they are coming into a store that is child friendly and mom friendly. We do not want to describe our customer orientation in terms of whether it views customer relationships as long or short term. Customers will buy the benefits our toys and products provide to the customers every day. A checklist will be at our service counter and we will ask every customer to fill one out when leaving the store. (1). Are we easy to do business with? Are we easy to contact? Is our information we provide fast and courteous. Are we easy to order from? Do we make reasonable promises? (2). Do we keep our promises? On product performance to, do we deliver. Did you get good service from our staff? Do you feel our staff members were helpful? (3). Do we meet the standards we set? When you asked specific questions were they answered? How was the general tone in the store? (4). Are we responsive? Do we listen? Do we follow up? Do we ask "Why not and why"? Do we treat customers as individual companies and individual people? (5). Do we work together? Do we share blame? Do we share information? Do we make joint decision? Do we provide satisfaction? (Shapiro, 13) 1. Market Segmentation for individuals and businesses Individuals: this segment is people buying a single product for their child or someone that they know. The demographics for this segment are a household income of >$50,000, have high aspirations for their children in terms of education and development and want to get started as soon as possible. Generally, they have at least an undergraduate degree with 41% of the segment having a graduate degree. Businesses: this group is buying the toys for children who are the business' clients. These organizations typically are either day care based, or school based such as nursery school or pre- school. The number of children that they care for generally ranges from seven to 25. 2. Growth rates for toys The United Stated census bureau took a wide range of products including toys and stated they increased 2.6% over the previous year. In May of 2010, LEGO came to Boston for a competition regarding there long and successful toy history. The Danish toy company LEGO sailed through the recession. The company that makes those brightly colored snap-together plastic bricks announced its profits last year jumped more than 60 percent. LEGO's success is all the more remarkable when you consider that just a few years ago, the toy company was falling apart (David, 112). II. Target Market Market segmentation is an intuitively appealing process and it makes a great deal of sense to try to find different segments of the market that are more interested in our toy product or to develop products for other segments. Given the myriad ways of segmenting markets, the task of determining which segments are better than other is a daunting task. It is expensive and inefficient to pursue too many different segments in the marketplace. A budget that stretched over too many markets results insufficient concentration of resources in any one segment. It is also very expensive to develop advertising and promotion programs for a large number of different target markets (Winer, 104). 1. Customer needs Meeting the objective needs and subjective wants of customers to drive sales is the basis of most businesses. It is how they build business relationships, remain profitable, and how they expand into new territories. While the process of meeting those needs and wants may be different for each client or project, your goal is to lead your team in satisfying customer goals and expectations so your company will receive future work. Needs may be very similar between customers, while wants can vary enormously based on the different perceptions and diverse experiences of your client base (Winer, 119). Even though many clients know what they require, some simply do not. In addition, some may have an idea of what they want without that necessarily corresponding with what they need. It will be up to this team to draw the needs and wants out of them in order to devise a plan and goals. When talking with customers, we should ask questions about their business. Parents need to decide what the Childs strengths are, or what are the Childs weaknesses? If working in sales, finding out what a client is lacking in their home is, low cost organic toys for the child can help find the correct solution that then can lead to a sale (Winer, 120). It is a common tendency that children love to suck their toys. The harmful pesticides and colors can make him sick and prone to diseases. It is your duty as a parent to provide safe toys to your child because a child is unaware about these safety points. Many parents show their concern about this problem but complain that they do not have choice. Now, you definitely have choice. Please switch to organic toys for your little angel. III. Competitive Analysis Competitor Analysis Framework Michael Porter presented a framework for analyzing competitors. This framework based on the following four key aspects of a competitor: Competitor's objectives Competitor's assumptions Competitor's strategy Competitor's capabilities Objectives and assumptions are what drive the competitor, and strategy and capabilities are what the competitor is doing or is capable of doing. These components depicted as shown in the following diagram (Porter, 83) Competitor Analysis Components What drives the competitor   What the competitor is doing or is capable of doing Objectives Strategy Competitor Response Profile Assumptions Resources & Capabilities Adapted from Michael E. Porter, Competitive Strategy, 1980, p. 49. A competitor analysis should include the more important existing competitors as well as potential competitors such as those firms that might enter the industry, for example, by extending their present strategy or by vertically integrating (Hunger, 39). The key competitors will be anyone that sells organic toys to mothers for babies. Urban Baby Runway is located in 3608 Falls Rd. Baltimore, MD. 4theKidsToyStore.com. "The Organic Toy Company". Specialists in certified organic cotton/wool soft toys. They provide the largest range on a single website of gorgeous, eczema-friendly, soft toys for babies and children of all ages. Premium quality eco-responsible and ethical toys, kind to the most delicate skin. Fast, friendly and personal service with 14-day money back guarantee. IV. Charts and Graphs for the ITS market analysis on organic toys. Market Analysis Our firm ITS Year 1 Year 2 Year 3 Year 4 Year 5 Potential Customers Growth CAGR Individuals 8% 3,354,430 3,622,784 3,912,607 4,225,616 4,563,665 8.00% Wholesale 10% 102,335 112,569 123,826 136,209 149,830 10.00% Total 8.06% 3,456,765 3,735,353 4,036,433 4,361,825 4,713,495 8.06% V. Competitor's SWOT TJX SWOT Analysis Strengths: Excess of 1500 Superstore in the United States Owns baby brand Babies R Us which adds another 200 + stores Markets successfully on the Web in collaboration with Amazon.com Lots of shelve space gives the company a strong bargaining position Diversified portfolio of products Weakness: Has no single and sustainable competitive advantage Has lost its number one position to Wal-Mart Customers in market today looking for cheaper goods Depend heavily on sales for the final quarter of the year Toys being the key Christmas Present they are dependent upon seasonal sales Opportunities: Opportunities for joint ventures and strategic alliances Toys "R" us works closely with Amazon on baby product categories Amazon very strong online retailer which warehouses products Toys "R" us is a good corporate citizen Toys "R" donated truck loads of toys to the Hurricane Katrina victims Threats: There is a strong competitive rivalry in the toy market The toy brand often not associated to the retailer Differentiation is difficult and toy retailers have to compete on price, range and availability Potential weakness is that countries and trading communities tend to impose quota and tariffs in order to protect local manufacturing If embargoes are implemented on countries such as China Toys "R" us will be with- out toys to sell (2). ITS SWOT our business Strengths: ITS will open first store in high traffic area mall Markets online as an total organic brand safe for children Markets with partners that are connected to sites like Face Book Twitter One wide aisle for children to browse with mom's Solid inventory at competitive prices betting Wal-Mart and Target Weaknesses: New concept with the sale of organic toys Marketing safety first Manufacturing keeping up with demand Develop environmental scanning techniques New Entrant in the marketplace for children's toys Opportunities: Demographics in favor of quality toys for children Trend to superstores Economic development overseas Engaging interest in other toy start-up companies to join forces Bargaining power of buyers Threats: Getting the first products on the shelves before other organic toy companies come to market Increase of government regulation Strong U.S. Competition New Product advances in baby and toddler products Getting patients on organic toys before competitors VI. Conclusion: The answers to the following questions revealed. In the area of Boston, the census bureau tells us there are approximately 3.5 Million people in this region. We will be targeting at minimum 1 Million families. Our customers are from homes that are over $200,000 and have 2.1 children in the household. Trends do tell our company that people are spending more on organic items on the rise. We think are chances are good that this company will succeed. We have surveyed the suburbs of Boston and have statistically calculated where the most foot traffic will be for the kind of store that constructed inside of a busy mall. We are better because we refuse to buy toys that are harmful in any way to any child. They toys are durable; they last for years and are organically constructed with healthy products. References: David, Fred. Strategic Management. Concepts and Cases. Pearson Education Inc. Prentice Hall: 2011. Print Hunger, David and Thomas Wheelen. Essentials of Strategic Management. Pearson Prentice Hall: 2007. Print. Porter, Michael. Competitive Advantage of Nations. The Free Press, A Division of Simon & Schuster: 1990. Print. Winer, Russell. Marketing Management. Pearson Prentice Hall: 2007. Print Read More