The Toys and Games Industry - Essay Example

Emerging Themes Project: The Toys and Games Industry Contents Social Media Marketing 3 Toys and Games Industry 4 Impact of Social Media on Toys and Games Industry 5 Strategic Recommendations 6 Self Reflection 7 Reference List 9 Bibliography 11 11 Social Media Marketing Social media has really come out as one of the major media channels in the contemporary business environment. As overall budget investment on social media marketing has increased, marketers are inclining towards ways and means to measure the overall success as well as return on investment from social media activities. Generally speaking, social media marketing can be called the process of increasing website traffic as well as generating sales by engaging in various activities around social media sites. Here, people and businesses implement strategies to become part of the growing online network. More and more people are becoming connected though internet and are relying on this online network for advice, socializing and sharing (Barnett and Coulson, 2010). The objective of the social media marketing is to allow connection, conversation as well as community building among participants and members. Social media is increasingly affecting consumer decisions. According to Casalo et al. (2011, p. 622) “this phenomenon is motivating deep changes in consumer behaviour.” Also, Yang, et al. (2012, p. 371) has indicated that “the development of online communities has reshaped consumers’ information-seeking and sharing behaviour.” Social media channels dominating the internet space are Facebook, Twitter, review sites and individual weblogs, significantly influencing consumer decisions (Park and Kim, 2008). The increasing complexity of media usage as well as increasing consumer segmentation has forced researchers and marketers to classify social media users for better targeting and positioning. For example, Eccleston and Griseri (2008) focused on consumer classification on the basis of social media usage such as mavens, connectors and salespeople. Various other researchers have given emphasis to the online information used for consumers such as impact of negative and positive information on consumer decisions (Willemsen, et al. 2011). Social media’s importance as a source of information as well as its influence in consumer decision making is run by three factors; accessibility or having sufficient information regarding the service or product, relevance of the information and experience of other consumers who have used the service or product. It has been observed that while purchasing high involvement products such as cars, more information channels are used compared to low involvement products. However, even in case of low involvement products, social media can be strategically used for increasing consumer traffic significantly. Latest online mediums such as Google plus, visual based contents and podcasting are increasingly becoming popular among consumers (Huffington post, 2014). Toys and Games Industry Demand and popularity for toys depend on the population growth of children till the age of 12. Similarly, demand for gaming products depend on the product innovation and personal income (Hoovers, 2014). In order to remain profitable in this market, companies need to constantly identify market trends and implement marketing strategies accordingly. Larger firms have the ability to offer wide selection of games and toys and also enjoy upper hand in manufacturing, purchasing, distribution, marketing and selling. Small and medium sized companies in this industry establish differentiation by catering niche markets such as iconic toys. They also gain competitive advantage by responding faster to the changing demand patterns. The major developed markets for toys and games are United States, European Union, Japan, France and Germany (Hoovers, 2014). Emerging nations such as China, India, Malaysia, Indonesia and Taiwan are also catching up on the increasing popularity of video games and advanced toys. The toys and gaming industry in US is extremely concentrated where top 50 firms control 75 percent of the market revenues. In Europe, toys and games generate around 5.8 billion Euros annually (Hoovers, 2014). The product segments in this industry can be divided into various categories such as non-electronic toys; electronic games and toys; vehicles for children such as wagons and scooters; collector and model sets and; non-electronic puzzles and games. Other categories include stuffed animals, dolls and related accessories, action figures and play sets (Hoovers, 2014). In case of traditional games and toys, the growth rate across United States and Europe has been moderate. However, growth patterns are far more promising in emerging nations such as India and China. This opens up opportunity for traditional toy manufacturing companies, especially European and US toy makers, to expand in emerging nations. The total revenue generated by EU from international export of traditional toys and games was 5.3 billion Euros (Marchand and Hennig-Thurau, 2013). As a result of the short life cycle of games and toys, the need for research and innovation has increased manifolds. Companies standing high on innovation have managed to achieve a long-term and sustainable competitive position. Innovative toys and games also minimize price competition thereby increasing overall profit margin in the industry (Michael and Chen, 2005). As a result of the continuous innovation and up gradation, games and toys form a burgeoning market. Also, various developments are occurring across globe creating a positive outlook for growth and development of this industry. Emerging markets such as China and India are becoming home to young population. High birth rate as well as lower income range makes traditional toys and games top selling items among majority of customer segments in these markets. Apart from that steady rise in purchasing power is also indicating the future demand for high end games and toys (Marchand and Hennig-Thurau, 2013). Impact of Social Media on Toys and Games Industry A major trend in traditional games and toys is the increasing shift from offline to online retail channel. Selling through internet has grown significantly and its share has crossed 20 percent of total sales in many mature markets (Marchand and Hennig-Thurau, 2013). This rise in internet sales is also pointing towards the fact that consumer’s nowadays spend more time online to find the right product for themselves. European markets which were least online oriented, have shown significant interest in social media off late. This rise of social media also might have far-reaching implications (Evans 2012). Social media is increasingly being used by consumers as a medium of information. Peer groups, open forums as well as network with people all around the globe have created a huge opportunity for individuals to know about the various developments as well as new launches happening in the games and toys market. Tapping this opportunity, various games have integrated themselves to various known social channels. Various other popular gaming brands have stepped into the social media environment. These games allow consumers to play together as well as communication information about the games, thus allowing better networking and word of mouth promotion (Kozinets, et al, 2010). At present, millions of individuals are enjoying similar offers. However, the overall profits generated from these online games are meagre and many big gaming brands have withdrawn their games from social media sites (Kaplan and Haenlein, 2010). For instance, owing to negative growth and stagnant usage, The Sims Social had to withdraw their online game from Facebook in 2013 (Marchand and Hennig-Thurau, 2013). Another development in the field of toys and games industry is the growing popularity of cross-over games and toys. With the help of this facility, traditional games can now be played on social media platforms. It also allows integration of physical games into various applications on smart phones and tablets. According to industry reports, several companies are now entering into this platform, mainly by collaborating with digital entertainment firms (Marchand and Hennig-Thurau, 2013). Many companies have taken a strategic step to connect traditional toys with the social media sector. This is yet another major impact of social media on the toys and games market. Various small businesses are implementing social media technologies for connecting with new-age families. For instance, gadgets such as BleepBleeps, Mailmen and Ubooly have come up with interactive and educational toys. These vibrant social media toys are garnering the attention of the infants and at the same time parent find these quiet easy to monitor (Yahoo, 2014). Strategic Recommendations As a result of the above trends and patterns in the games and toys industry, companies are realising that the best way to utilise social media is by building brand communities for the game title. This will help in enhancing buzz around the games by allowing individuals to come together in one platform and engage with the game, even if they are not actually playing the game (Marchand and Hennig-Thurau, 2013). Other gaming companies are integrating with social media elements by letting players connect directly with other players across various social media networks. For instance, personal achievements in games can be shared with other gamers, friends as well as associated communities satisfying the need for self-expression. Another interesting research avenue for marketers will be to understand the impact of various brand pages over the success of the brand. Many companies such as Forza Horizon have tasted success by establishing cross-over platforms where traditional as well as modern games can be played in smart phones and tablets (Marchand and Hennig-Thurau, 2013). Many leagues as well as sports games companies are utilising game social media for displaying, analysing as well as predicting the game outcomes. Social media can be implemented not only as an interactive platform, but also for understanding the demand patterns across demography and regions. For instance, increasing number of US teenagers prefer playing online games rather than go out for movies (NPD Group Inc, 2009). A creative way of engaging movie-enthusiast customers will be through launching popular movie-theme based videogames (Boyle, et al, 2012). In order to ensure that traditional games and toys are kept intact, companies can use social media to interact with parents and children together. Branding and communication are the two major applications of social media. Companies selling toys can buy space in various social media sites and advertise their brands in order to generate awareness. Parents are the decision makers while purchasing toys for infants and kids. Brands can establish interactive social media platforms where parents can talk about their children’s needs and their own expectations such as safety, comfort as well as information regarding disposal of toys (Yahoo, 2014). Customers, especially school and college students often need to interact with their friends while playing games. These needs are fundamentally fulfilled by second screen media such as WhatsApp and Facebook messenger (Cole and Griffiths, 2007). However, online games can launch their individual chatting programs which can be used while playing the games itself. These chats can range from topics such as status of game, performance or even school or college homework. However, marketers lack sufficient information regarding the impact of such behaviours on the enjoyment and satisfaction level of players and more research is needed in the above field for better strategy implementation. Self Reflection The objective of the report was to develop a critical understanding on social media marketing by evaluating its influence as well as present and future applications in a particular industry. For this, toys and games industry was chosen. The project was an eye opener as it enhanced by knowledge regarding applications of social media marketing significantly. The approach towards the report was extensive literature survey on areas ranging from social media sites, applications, games industry, changing patterns and demands among various customer demographics. The study helped in evaluating as well as recommending various strategic ideas for the games and toys industry. During the entire project I learned valuable lessons such as time management, distinguishing useful sites from others as well as prioritising my work according to importance and urgency. During the process, I also gained enormous confidence by interacting with professors, peers and friends. I attended various brain-storming sessions and with each session my knowledge and opinions regarding the subject matter enhanced. Majority of models applied during the project are based on the industry and customer usage on social media. An important model such as game theory has been applied in order to understand the changing demand patterns among consumers. The results from the study suggested that developing nations are increasing accepting technologically advanced video and computer games. Interaction between social media and games and toy industry is increasing with the growing usage of tablets and smart phones. Also companies are using various interactive gadgets to engage parents and kids together on various social media platforms. Organisations using this report will gain by the critical analysis of the present gaming and toys industry. They will also benefit from the strategic recommendations provided as they have been analysed after extensive literature review and have huge practical applications. Reference List Barnett, J. and Coulson, M., 2010. Virtually Real: A Psychological Perspective on Massively Multiplayer Online Games. Review of General Psychology, 14(2), pp. 167–179. Boyle, E. A., Connolly, T., Hainey, T. and Boyle, J.M., 2012. Engagement in Digital Entertainment Games: A Systematic Review. Computers in Human Behavior, 28(3), pp. 771–80. Casalo, L.V., Flavian, C. and Guinaliu, M., 2011. Understanding the intention to follow the advice obtained in an online travel community. Computers in Human Behaviour, 27, pp. 622–633. Cole, H. and Griffiths, M.D., 2007. Social Interactions in Massively Multiplayer Online Role Playing Gamers. Cyber psychology & Behavior, 10(4), pp. 575–583. Eccleston, D. and Griseri, L., 2008. How does Web 2.0 stretch traditional influencing patterns? 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