The World Toy Industry - Case Study Example

Marketing Introduction This study helps to identify the key features of the toy industry and how different factors influence this industry. The market position of Green Toys have been analysed to have a clear idea about the situation of the industry. There is an increasing trend in income all over the world which has led to a rise in the purchasing power of consumers (Bridges, Briesch and Yim, 2006). Rapid consumerism is one of the driving forces for the toy industry. There are various factors that influence the global toy industry. With the advancement in technology, the toy manufacturing companies have been forced to develop toys which are supported by exceptional cutting edge technology. Market is being segmented in order to help the companies to focus on goods which are specially manufactured with the objective to meet the requirements of kids. Key Success Factors in the World Toy Industry There are several factors that govern the toy industry all over the world. The success and growth of the industry depends on some success factors. It has been seen that a huge toy market exists all over the world and the companies associated with the manufacturing of toys are influenced by various market forces. The success factors also vary with the nation of operation. Different countries have different sales rate. The market structure is also different in various countries (Sun and Wing, 2005). There are several factors which affect the demand for toys all over the world. Kids prefer toys which can be operated electronically. The companies thus focus on developing toys that supports automated functions (Chan and Chin, 2007). Consumers are also attracted to environmental friendly products. This is because; health related issues have become a growing concern among the population all over the world. Parents prefer toys which would not harm their child’s health. Companies should give emphasis on meeting all safety procedures while manufacturing the toys. This would help the toy industry to experience a sustaining growth (Cross, 2009). Effective marketing is an important factor that ensures success for the toy industry. Parents are now highly advanced and educated. They understand the value and worth of a certain product. They prefer to evaluate product specifications on the internet before making a buying decision. Innovative promotional activities hugely influence the success rate in the toy industry. The expansion policies of the companies in order to establish a global presence is another significant factor that affects the growth rate of the toy industry. Toy companies should take steps to follow the strategies of internationalization (Chan, Chin and Lam, 2007). Many countries have taken steps to implement the policy of one child per family. This has helped the families to concentrate intensively on the single child. Thus the expenditure share on the single child has increased. This has indirectly led to the growth of toy industries. Proper distribution channel for the manufactured toys enhance the growth rate of this industry. Many supermarkets and stores have been developed for the customers. Thus, it can be seen that varied factors can affect the growth of the toy industry (Wong, Arlbjørn and Johansen, 2005). The competitive advantage of Green Toys Green Toys has some exclusive business operations which enables it to enjoy competitive advantage in the toy industry. The products of Green Toys are preferred by consumers as the company abides by special regulations that enable them to produce toys which can be safely used by a kid (Wilkinson and Lamb, 1999). The company uses the regulations that are laid by California. There is an exponential growth trend in the business profitability of Green Toys (Carlsen, Floyd, and Lundhus, 2007). Green Toys went into collaboration with LUNAR and developed traditional classic toys which were innovative and affordable at the same time. The innovative quotient of the toys comes from the fact that these toys were manufactured using recycled materials. Old milk jugs were used in the production of toys. These toys were mainly manufactured in the United States and were produced in a cost effective way. The toys met high safety standards and were produced in a way which helped the company to maintain sustainability of the environment (Pereira, 2008). The manufacturing process of Green Toys ensures that there is a reduction in the emission of green house gasses which is harmful for the environment (Allen, 1999). The usage of fossil fuel for toy manufacturing is also reduced by the company. This enhances the overall health conditions and therefore, consumers have more preference for the products of Green Toys. Even if the competitors of Green Toys adopted environment friendly methods of manufacturing, they failed to compete with the company. This is because Green Toys evaluated the content of chemical in the toys more effectively (Craan, Myres and Green, 1997). Green toys also served the society by creating more job opportunities in the United States. The toys manufactured by the company are of high quality and exceptional raw material and packaging are used in the process. This enhances the trust of consumers towards the products which directly results in increased sales. The exceptional performance of the company and its business operations has enabled them to maintain competitive advantage over its rivals (Tsai, Chuang, Chao and Chang, 2012). Viability of Expansion Strategies Majority of the sales of Green Toys have come from the United States even after they have distributing networks in 35 nations (Green Toys Inc., 2014). Evaluation of market conditions suggests that Green Toys should strategically make expansion plans for establishing their brand name globally. Green Toys would incur lower expenditure in its manufacturing process if it considers plans of expansion as one of its business objectives. This is because, if the company uses local resources in the manufacturing process, costs will reduce and the products can be sold at a competitive price in the global markets. The profit margin for the company will grow eventually (Green Toys Inc., 2014). The current and forecasted market behaviour suggests that Green Toys has huge scope for expansion in the global market. The company should particularly try to capture the developing markets. The trends in the consumption expenditure of the developing countries suggest that there is a potential market for kid’s products. This is due to the fact that the child population is continuously increasing in the developing nation. Similar trends are familiar in many developed countries also. Thus, it is imperative for Green Toys to emphasise on international expansion (Ekeledo and Sivakumar, 1998). The operation of Green toys is generally supported to serve the niche market. The company should focus on expanding in the mass market which would help in reaching large number of people at a time. It should evaluate the factors which contribute to international expansion. This would help it to make a cost benefit analysis of global expansion. It should also identify the significant competitors operating in the global market. This would prepare it to plan effectively in order to sustain in the long run. Green Toys’ competitive advantage would certainly help it to carry on operation internationally (Moses, 2000). The primary reason of expansion is to increase profitability and total sales of the company. Market opportunities should be capitalised by Green Toys’ if it wants to increase growth and profit. The company would be able to enjoy technological competence that is present in the global market. The prospects of the foreign markets would ensure an enhancement in the brand image of the company. Green Toys would also be able to enjoy economies of scale through global expansion. Operating in global markets will also help Green Toys in enjoying tax benefits. This would help the company to appropriate profit to a low tax region by the way of transfer pricing mechanisms (Ellis, 2000). The company should strategically carry its manufacturing activities in a tax haven region. All the above growth opportunities suggest that Green Toys should strategise expansion plans in the international market (Ellis, 2000). Target markets Green Toys should monitor all the potential markets for its expansion plans. It should venture in those markets which would offer it with significant growth opportunities not only in the short term, but also in the long term. All countries do not provide same scope for growth and the company should thus make strategies to identify potential opportunities in various regions. Some developing countries also have markets which are favourable for the toy industry. The developed nations also offer advantages that are compatible with growth. The company should intensively market their products through promotional activities to make the people aware about their products. Green Toys should evaluate the distribution channels properly before venturing into the global markets (Bridges, Briesch and Yim, 2006). Markets in Middle East and Asia Pacific have a positive outlook towards the toy industry (Todd, 2001). This is because these regions have an increasing trend in child population. Certain regions of Africa also have an increase in the population of age group between 0-14 (Buckingham, 2007). Similar conditions were reported in Latin America. Emerging markets like South Africa and India are also viable for carrying expansion plans. The markets in China are also advantageous for setting up expansion plans. The kids in these regions prefer both traditional toys and technologically advanced toys (Sutherland and Thompson, 2003). The parents in the developing countries also associate enhancement in intelligence with interactive innovative games for their kids. The developed markets of Europe, Japan and North America should also be considered for expansion. Per capita expenditure towards kids is also high in these regions. Green Toys should capitalize on such opportunities. It can also expand in the less developed poor countries by manufacturing low priced toys (Sit and Chan, 2005). Conclusion The study shows that the toy industry is a booming and the rising consumerism has led to its growth. There are several factors which influence the business operations in this industry. The factors have to be properly identified by the companies in order to ensure sustaining growth in the long term. Green Toys is one such company who has made efforts to understand the attributes of the toy industry. They have adapted innovative ideas and this has enabled them to gain comparative advantage over their rivals. The company is on the path of evaluating the scope and viability of expansion in the global market to enhance their brand image. This is done by understanding the markets all over the world and then setting objectives according to the target market requirements. Reference list Allen, B., 1999. Phthalate esters in childrens toys. Green Chemistry, 1(4), pp. 102-104. Bridges, E. Briesch, R and Yim, C., 2006. Effects of prior brand usage and promotion on consumer promotion response. Journal of retailing, 82, 4, pp. 295-307. Buckingham, D., 2007. Selling childhood? Children and consumer culture. Journal of Children and Media, 1(1), pp. 15-24. Carlsen, C. G., Floyd, A. 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