Hamleys: An Environmental Analysis of Its Business Environment - Case Study Example

May 29, 2021

Table of Contents

Introduction3

Background of the Brand4

Detailed Marketing Mix of the Brand (7 Ps)5

PESTLE Analysis of the Brand7

Porters 5 Forces of the Brand8

SWOT Analysis of the Brand9

Segmentation, Targeting & Positioning of the Brand10

Consumer Behaviour Analysis of the Brand10

Importance of Market Research11

Recommendations for the Brand11

Conclusions12

Reference List14

• Introduction

A brief overview of the business environment in the United Kingdom (UK) has revealed that it is predominantly competitive. Other descriptive details emphasized the essential mechanisms that make the environment conducive for investors, such as having “efficient regulation, highly developed infrastructure and high levels of economic freedom” (Euromonitor International, 2016, p. 1). In this regard, organizational players in the UK market continue to monitor the factors the impinge on the firms’ various opertions and functions. For Hamleys, a toy manufacturer whose historical origins were traced in 1760, or 256 years ago (Hamleys, 2016), the future holds as much challenge and mystery as with other contemporary organizations.

The current reporte hereby presents a brief background of the Hamleys brand, prior to presenting details on the importance of marketing for the brand. Further, a detailed marketing mix of the brand (7 Ps) would also be expounded. Subsequent analytical tools such as PESTLE analysis, Porters five (5) forces, and SWOT analysis would also be provided in detail. Moreover, a section on segmentation, targeting and positioning would be disclosed, in conjunction with undertaking a consumer behavior analysis of the Hamleys brand. Finally, before providing some recommendations, the importance of market research would be discussed to ensure that essential concerns would be covered regarding current and future trends. The concluding portion would highlight the main points that were discussed and would provide synthesizing remarks for the perusal of the Directors of the Hamleys brand.

• Background of the Brand

The brand, Hamleys, was coined from the surname of the founder, William

Hamley (Hamleys, n.d.). The length of time of business existence spanning more than two (2) and a half centuries attests to its ability to adapt and adjust to the changing demands of the times. As such, toys evidently remained sustained popularity since the late 1700s until current times, which paved the way for Hamleys to continue producing and marketing toys that have been patronized by children across generations.

To date, Hamleys was noted to be established in strategic locations including Cardiff, Dublin, Glasgow, Lakeside, London, and Manchester (Hamleys, 2016). Moreover, Hamleys manufactures and markets a comprehensive collection of toys which are classified according to preschool, soft toys, arts and crafts, dolls, build it, action toys, games, outdoor, vehicles, and special offers (Hamleys, 2016). In Hamley’s London, the store is located at Regent Street. In addition, Hamleys has also established other branches within the UK and Ireland areas, numbering to about 11 stores (Hamleys, 2016).

Concurrently, there are many toy manufacturers who compete for the market share in the UK. Some of the top toy manufacturers who are direct competitors of the brand were identified as follows: Lego, Flair Preziosi, Hasbro, Mookie Toys, Jakks Pacific, and Mattel (British Toy & Hobby Association, 2016).

Importance of Marketing for the Brand

Marketing the Hamleys brand is significantly important to ensure continued success and sustained existence of the company. Since Hamleys has already existed for more than 250 years, evidently, marketing the brand in the most effective manner had successfully contributed to its longevity in the toy market.

According to reports, the Hamleys brand has been expanding globally through

franchising (Holland, 2013). As stipulated, “the franchise model has been such a

success since the retailer took its first international steps in 2008 – it doubled its franchise stores in 2012 and has almost doubled them again this year - that Hamleys aims to open more than 200 overseas stores in the next five years” (Holland, 2013, p. 1). Likewise, Hamleys was reported to have been sold to a French toy retailer, Groupe Ludendo, who allegedly shelled out £60m for Hamleys in 2012 (Ruddick, 2014). The report indicated that the objective is to increase brand awareness on a global scale (Holland, 2013). In current news, reports disclosed that Hamleys is being purchased by “C.banner International Holdings Ltd, the Chinese footwear company, (which) is poised to buy the 255-year-old British toy retailer Hamleys for around 100 million pounds ($154.1 million), as part of efforts to enhance its global branding strategy” (Zhuoqiong, 2015, p. 1). From the series of venture strategies, it was evident that the paramount goal for the Hamleys brand is to enhance global brand awareness through various diversification strategies.

• Detailed Marketing Mix of the Brand (7 Ps)

Product: Hamleys brand is an extensive brand of toys classified according to preschool, soft toys, arts and crafts, dolls, build it, action toys, games, outdoor, vehicles, and special offers (Hamleys, 2016). Aside from toys, Hamleys is noted to be providing fun through the following events: Sylvanian Families LIVE at Hamleys!, Hamleys It's Bubble Time!, Bubble Dash!, and Bubble Bingo! for the months of June to July 2016 (Hamlehys, 2016).

Price: Hamleys products are sold in affordable prices which cater to different clients according to the needs and purchasing power. With the extensive display and collection of toys, clients are sure to find a toy that fits their budget and financial resources.

Place: The London store is reported to be located at 188-196 Regent Street,

London (Hamleys, 2016). The official website could also be used to view and purchase items for delivery using terms and conditions set under self service delivery (Hamleys, 2016).

Promotion: Hamleys toys are promoted online through their official website as well as through joining the Hamleys Club (Hamleys, 2016). There are various offers that members can avail of including the opportunity to receive monthly newsletter through email that stipulates competition, in store events, and other promotional offers.

People: Projects an image of youthful enthusiasm since they are promoting a product that caters to children. As noted from their official website under ‘careers’, Hamleys is looking for people who are passionate, enthusiastic, memorable individuals who “live and breathe as 7 year olds and like to think that "A life at Hamleys" is a lot more than the average work experience, but instead a fun place where personal development is encouraged and a global outlook is fostered” (Hamleys, 2016, p. 1).

Process: The process entails the entire experience from offering potential clients to purchase selected toys, to viewing the toys in the actual toy stores (or online), to paying for it (and eventual delivery when ordered online). Hamleys offered social media connections through Facebook, Twitter, Instagram, and YouTube (Hamleys, 2016).

Physical Evidence: Since buyers are purchasing a tangible product (toys) which can be viewed in the stores or online, they could actually be provided with the experience of seeing, trying, touching, and connecting with Hamleys.

• PESTLE Analysis of the Brand

Political: Supportive legislations and regulations as attested by the more than two

(2) centuries of existence for Hamleys which adheres and complies to directives, as

needed.

Economic: Good economic prospects with 2.2% growth in GDP, 3% growth in consumer spending, as well as minimum inflation of 0.5% (PwC, 2016). The increase in consumer spending spurs increased potentials for sales and profits for Hamleys and other toy manufacturers in the UK.

Social: Hamleys toys cater to different social classes as they offer various types of toys with prices ranging from below £ 5 and upwards. With the increase in consumer spending, it is forecasted that target customers would be purchasing more toys for the current and coming years.

Technological: Advances in technology assists in producing toys with innovative features and designs. As mentioned in the industry report, the robust growth of toys in the UK was reported to be driven by movies which became blockbusters in contemporary times, such as Frozen, Minions, Avengers, Jurassic World, and Star Wars (NPD Group, Inc., 2016). Hamleys toys carry and offer these toys to join the bandwagon.

Legal: Hamleys adheres to regulations prescribed for employees (labor), as well as conformity to health and safety standards of employees and customers. In addition, their official website contains legal information for users and customers, as required.

Environmental: Hamleys reportedly complies with standards for environmental protection and conservation; and even supports recycling through joining and supporting the regulations stipulated by the Waste Electrical Equipment (WEE) Distribution Scheme (Recycle-more-uk, n.d.).

• Porters 5 Forces of the Brand

Competitive Rivalry: Strong, as evidenced from the number of competitors and brands of toys that are available in the UK. The major competitors of Hamleys were noted as follows: ASDA Group Ltd., Toys “R” Us Limited, Amazon UK Services Ltd. (Hoover's, Inc., 2016).

Bargaining Power of Buyers: Weak, since there are innumerable buyers who pose little influence in dictating any of the strategies in Hamleys marketing mix.

Bargaining Power of Suppliers: Weak, since Hamleys manufactures its own toys and some of the suppliers of other toys to be marketed ensure that the prices are competitive and affordable to attract and encourage clients to purchase.

Threat of Substitutes: Strong, since there are various toy manufacturers offering allegedly similar toys in functions and features.

Threat of New Entrants: Average to strong, since the toy market exhibits robust growth which makes it lucrative for toy manufacturers to explore. Likewise, the ease of entry in regulations and licensing requirements seem to be supportive with absence of barriers to entry.

• SWOT Analysis of the Brand

Strengths:

• Exemplary reputation generated from more than two (2) centuries of experience in manufacturing and marketing toys in the UK.
• Has extensive collection of toys which cater to various clients from all walks of life.
• Has other locations in other parts of the world, including Sweden, South Africa, Norway, Finland, Denmark, and the Czech Republic (Hamleys, 2016).
• Very attractive to investors with experiences of being bought by a French retailer and currently, a large consumer organization in China, attesting its global reach.

Weaknesses

• Compared to other toys, could be perceived as projecting a premium image

which could detract customers from low income groups.

• The recent acquisitions from a French retailer, and then a Chinese retailer could be perceived as a confusing move to the consumers (why sell?) and could affect long term prospects of sustained success.

Opportunities

• Venturing in other new geographic locations through acquisition or franchising.
• Expanding in other domestic locations.
• Tapping the online medium through increased promotions in other social media.

Threats

• Continued increased and stiffer competition from other toy manufacturers;
• Competition from online games;
• Weakening of the brand through constant change in ownership.
• Segmentation, Targeting & Positioning of the Brand

Hamleys is perceived to be segmented according to geographic locations Sweden, South Africa, Norway, Finland, Denmark, and the Czech Republic (Hamleys, 2016), as well as according to products offered to the clients: preschool, soft toys, arts and crafts, dolls, build it, action toys, games, outdoor, vehicles, and special offers (Hamleys, 2016). As such, it caters to diverse target clients (parents and children) who exhibit different interests in toys (indoor games or outdoor games, games for different children in various stages of growth and development, as well as children of different gender, cultural or ethnic orientations). The brand is positioned as a premium brand where the tag line carries the message: “The Finest Toys in the World” (Brown, 2015).

• Consumer Behaviour Analysis of the Brand

From customer feedback of the brand, there was antithetical comments that were noted. One customer was significantly delighted by the service of staff from Hamleys; while another customer noted “overpriced, overcrowded, rude and annoying staff” (Anon., 2016, p. 1). In other reviews, there are mixed responses with an average of 7.1 (great) from a scale of zero to ten (Trust Pilot A/S, 2016).

• Importance of Market Research

Market research is deemed to be important for manufacturers and consumers, alike, including Hamleys. Market research would assist Hamleys in identifying other areas where there could be great potentials for expansion. In addition, there are also other benefits of market research including identifying changes in customer preferences in toys, new technologies in toy designs and manufacturing processes, as well as responding and reacting to strategies applied by competitors in the toy industry. Since Hamleys aims to enhance global brand awareness, market research could identify areas where brand awareness needs to be enforced.

• Recommendations for the Brand

Given the different results of varied analytical tools, the following recommendations are proposed with the objective of increasing global brand awareness, as well as increasing competitive advantage, on a global sphere:

• Address the weaknesses by coming up with toys that would cater to the lower income group without compromising quality;
• Publish a report to explain current moves of selling Hamleys as part of a global awareness strategy to enforce competitive advantage and to do away with any negative image or impact of successive selling;
• Since the franchising model had been considered as effective, study the possibility of increasing franchises of Hamleys in other geographic areas domestically or internationally;
• Use social media and the online medium in a more dynamic and interactive manner to prove how Hamleys brand had served its markets in the most effective and successful manner through its two (2) centuries of existence;
• While serving other international markets, use market research to solicit preferences of local consumers with regards to contemporary toys;
• Study the possibility of offering interactive online games that would cater to consumers who prefer using the electronic medium;
• Increase promotions and advertisements, especially in new areas where Hamleys would intend to venture in.
• Conclusions

The competitive advantage of Hamleys have been firmly established through its more than two (2) centuries of remarkably productive experience. The competitive toy industry in the UK poses intense threat for Hamleys, especially since it currently undergoes changes in ownership. As such, to sustain the leadership in pioneering with offering toys of extensive collections and in a more global sphere, Hamleys should use the analytical tools to be more cognizant of its strengths and opportunities, as well as to address weaknesses and threats. Likewise, Hamleys need to recognize various factors in the macro environment, especially those that impinge current operations and performance. Moreover, as recommended, Hamleys need to increase global brand awareness by undertaking more active market research in areas it intends to venture in.

In retrospect, Hamleys achievement of having existed profitably for more than two (2) centuries is a strength and a feat that is difficult to replicate. As such, it could be used as a unique selling point which would make any investor or new proprietor proud to gain ownership of its brand name. Further, any subsequent owner of Hamleys should take good care of the legacy of the brand, as well as the rich historical mementos that go with it.

• Reference List

Anon., 2016. Hamleys Reviews. [Online] Available at: http://www.reviews.co.uk/company-reviews/store/Hamleys[Accessed 20 June 2016].

British Toy & Hobby Association, 2016. UK TOY INDUSTRY GREW BY 5.9 PERCENT MAKING IT THE LARGEST TOY MARKET IN EUROPE. [Online] Available at: http://www.btha.co.uk/wp-content/uploads/2016/01/Market-performance-press-release-.pdf[Accessed 19 June 2016].

Brown, C., 2015. Toy wars between competing retail giants. [Online] Available at: http://www.retailgazette.co.uk/blog/2015/08/toy-wars-between-competing-retail-giants[Accessed 20 June 2016].

Euromonitor International, 2016. Business Dynamics: United Kingdom. [Online] Available at: http://www.euromonitor.com/business-dynamics-united-kingdom/report[Accessed 19 June 2016].

Hamlehys, 2016. What's On London. [Online] Available at: http://www.hamleys.com/explore-whatson-london.irs[Accessed 20 June 2016].

Hamleys, 2016. Careers. [Online] Available at: http://www.hamleys.com/south_africa/explore-life-people.irs[Accessed 20 June 2016].

Hamleys, 2016. Explore Home. [Online] Available at: http://www.hamleys.com/explore-index.irs[Accessed 19 June 2016].

Hamleys, 2016. Hamleys History. [Online] Available at: http://www.hamleys.com/explore-life-history.irs[Accessed 19 June 2016].

Hamleys, 2016. Join the Hamleys Club!. [Online] Available at: http://www.hamleys.com/south_africa/explore-hamleysclub.irs[Accessed 20 June 2016].

Hamleys, 2016. Life at Hamleys. [Online] Available at: http://www.hamleys.com/explore-life.irs[Accessed 16 June 2016].

Hamleys, 2016. Self Service Delivery. [Online] Available at: http://www.hamleys.com/delivery-information.irs[Accessed 20 June 2016].

Hamleys, 2016. Social Networking. [Online] Available at: http://www.hamleys.com/south_africa/explore-social.irs[Accessed 20 June 2016].

Hamleys, 2016. UK & Ireland. [Online] Available at: http://www.hamleys.com/explore-stores.irs[Accessed 20 June 2016].

Holland, T., 2013. Analysis: How Hamleys aims to take the brand worldwide. [Online] Available at: http://www.retail-week.com/analysis-how-hamleys-aims-to-take-the-brand-worldwide/5052890.fullarticle[Accessed 20 June 2016].

Hoover's, Inc., 2016. HAMLEYS OF LONDON LIMITED Competition. [Online] Available at: http://www.hoovers.com/company-information/cs/competition.hamleys_of_london_limited.c0a61fd7c68aa922.html[Accessed 20 June 2016].

NPD Group, Inc., 2016. UK Toy Industry Grew by 5.9 Percent Making It the Largest Toy Market in Europe. [Online] Available at: https://www.npdgroup.co.uk/wps/portal/npd/uk/news/press-releases/uk-toy-industry-grew-by-59-percent-making-it-the-largest-toy-market-in-europe/[Accessed 20 June 2016].

PwC, 2016. UK Economic Outlook - March 2016. [Online] Available at: http://www.pwc.co.uk/services/economics-policy/insights/uk-economic-outlook.html[Accessed 20 June 2016].

Recycle-more-uk, n.d.. The Waste Electrical Equipment (WEEE) Regulations. [Online] Available at: http://e4efb145fe57425262f8-8c08b3c7c5a9b2717576610680832994.r84.cf3.rackcdn.com/WEEE.pdf[Accessed 20 June 2016].

Ruddick, G., 2014. After 133 years, Hamleys faces wealthy new challenger for position of London's premier toy shop. [Online] Available at: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11130450/Hamleys-faces-wealthy-new-challenger-for-position-of-Londons-premier-toy-shop.html[Accessed 20 June 2016].

Trust Pilot A/S, 2016. Hamleys reviews. [Online] Available at: https://uk.trustpilot.com/review/www.hamleys.com[Accessed 20 June 2016].

Zhuoqiong, W., 2015. C.banner to buy iconic UK toy store Hamleys. [Online] Available at: http://www.chinadaily.com.cn/business/2015-10/24/content_22272600.htm[Accessed 20 June 2016].