The international marketing is the application of the marketing activities in more than country. The international marketing activities are based on the local marketing activates of one country and adapted according to the customer demand and requirements in different geographical locations. The international marketing activities are conducted when an organization enters into a foreign market by exporting, franchising, joint venture or direct entry mode. In this scenario, the company needs to develop a marketing mix for the foreign country (Craig and Douglas, 2005). The marketing mix for the local country includes localization, local product offering or changes in the pricing of the product. Toys ‘R’ Us is a retail organization which deals with the toys, sports products and juvenile products with headquarters in New York, USA. The company operates through online mediums and brick and mortar methods as ecommerce site or retail organization respectively. The company has a large number of retail stores in the USA as well as licensed stores in other international locations. In its global operations, the company operates by two modes, international mode and domestic subsidiary. The international subsidiary is responsible for the procurement, marketing, production and all other activities in foreign countries, whereas the domestic subsidiary look after the operations of the local country (Toys ‘R’ Us, 2017). The profitability of the company has reduced substantially in the recent years; therefore, it is important that the organization seek new avenues. In this regard, several international markets have been explored in relation of their market attractiveness and the strength and the weaknesses of the organization. The report also covers the marketing mix for the potential market.
Global macro-Toys industry
The macro environment of an organization can be referred as the external factors which cannot be controlled by the organization. It includes the legal, political, social and economic factors which influences the performance of an organization. It is important that a business organization must analyze and examine the external operating environment.
Political Factors: There tax policies and the international trade laws can impact the business of a company. As the product of the company is predominantly used by the children, there are legislations in different countries, which control the advertising and marketing of the organizations. The distribution of certain toys considered unsafe or toxic are also prohibited (Andreiana, Stoica and Ivan, 2014).
Economic Factors: As the toys are considered as a leisure product rather than a necessity, the GDP and the purchasing power of the country has a huge impact on the business of a toy company. The customers in the growing economy will have high purchasing power and thus the companies will have high business. The average economic growth rate of India is 7%. The economy of Russia is contracting and the inflation is increasing (Ellyat, 2016). In Nigeria, the economic growth of the country has sharply declined in the recent years. The growth rate slowly declined to 3.0% in 2015 and the inflation increased to 9.0% (African Development Bank Group, 2017).
Social Factors: A toy company needs to adapt its products according to the latest trends as the children are highly attracted towards latest movies and popular characters. They are also easily influenced by their peers and demand new toys frequently. Therefore, it is important that a toy company experiments with its product to retain its market share (Herzog, 2010).
Technological Factors: In the present times, technology is important for the toy industry in the manufacturing, product development and the innovation in the company. The company needs to innovate frequently to remain competitive in the industry (Khosrowpour, 2007).
Legal Factors: The toy industry is heavily regulated by government laws and regulations since the toys manufactured are primarily used by the children. There are various government legislations which control the use and manufacturing of toys. The legislations involve prohibition of use of toxic and hazardous materials in the manufacturing of toys. Moroever, the toys manufacturers should also abide by the consumer privacy laws.
Environmental Factors: The manufacturing of toys involves processes and raw materials which can be negative for the environment. There are several laws which emphasize the reduction of the carbon footprint and toxic materials in the toy manufacturing.
Global Competitive factors -Toys industry
The competition in the toy industry can be evaluated with the Porter’s five force framework. This framework is used to examine the attractiveness and the competitive forces in an industry. If the competition in the industry is high, then the company needs to develop its core competency to achieve profit levels. The five force analysis of Toys ‘R’ Us is:
Threat of New Entrants: In the toy industry, the threat of new entrant is low as the industry is saturated and has limited profit margins. In addition to it, the main customers of the company ‘children’ have strong preference towards their favorite toys which is hard to change (Porter, 2008).
Threat of Substitutes: With the technological advancement, several advanced games and online gaming has become hugely popular among the children. Therefore, the threat of substitution is high.
Bargaining Power of Customers: The toy industry market is saturated and a large number of companies are operational in it. Therefore, the intensity of the competition in the industry is high and; thus, the bargaining power of the customers is high (Porter, 2008).
Bargaining Power of Suppliers: the Company, Toys ‘R’ Us is a retail organization which sells the toy product manufactured by the local developers; therefore, its major suppliers are the local toy manufacturers. They hold a low power on the company as Toys ‘R’ Us is one of the biggest customers for the suppliers (Besanko et al., 2009).
Industry Rivalry: There is an intense competition in the international toy industry, as a large number of international firms such as Lego, Mattel, Namco Bandai are operational in the international toy industry.
Internal business environment of Toys ‘R’ Us l
The internal business environment of the organization can be evaluated from the value chain framework which examines which internal activities add value to the business of the organization.
Value Chain Analysis:
The inbound logistics refers to the transportation, storage and the delivery of the raw materials from the suppliers. Toys ‘R’ Us is a retail organization which has developed a robust network for the transportation of manufactured products from the suppliers to the retail outlets of the company. The transportation medium ensures the highest standard for the safety and the quality of the products (Pahl & Richter, 2009).
The primary operations of the organization are procurement of the raw materials and selling them at the retail outlets. The company buys the products from the local manufacturer and sells them at retail outlets and generates value by selling them at high cost. Other than that, the maintenance of retail outlets is another function of the organization.
The company has a number of retail stores all across the globe which offers the different products to the customers. It has also initiated e-retailing operations to compete with other online retailers (Johnson, 2001).
Marketing and Sales
Toys ‘R’ Us has implemented numerous marketing strategies to promote themselves in front of their target audience. It includes in-store marketing, email marketing and broadcasting on television and newspapers.
In the present competitive era, the companies are using effective customer services to retain the customer loyalty and increase the customer retention. In the same essence, the organization is also using customer services in its online as well as brick and mortar stores to attract and retain customers.
The SWOT analysis is an internal analysis framework which discusses the internal strengths and weaknesses of an organization and examines the external opportunities and threats.
· Brand value
· Qualitative products
· High Experience
· Low product range
· Lack of innovation
· Limited profit margins
· Global markets
· Expansion in the developing countries
· Use of technology (Porter, 2008)
· Demand fluctuations due to high impact of social trends
· Counterfeit organizations in Asian countries (Wenderoth, 2009)
· Strong competition
Summary of Findings
It could be summarized that the competitiveness in the toy industry is high. The market for the toy industry is limited with intense competition with in the already established companies. Toys ‘R’ Us is facing intense competition from other companies in the same industry. AS a result, the company should expand in other countries to increase its profitability.
Analysis of Potential Target Market using 12 Cs Framework to evaluate the market attractiveness of India, Sri Lanka, Nigeria and Russia
The 12 Cs Framework is use to examine the market attractiveness of the potential markets. The 12 Cs which examines the market attractiveness is country, culture, communication, concentration, commitment, channels of distribution, capacity, currency, control and coordination, choices, contractual obligations and caveats (Wiedemann, 2013).
- Democratic in nature
- Attractive policies for foreign investors
- High customer purchasing power
- Growing economy
- Children commonly use toys to play
- Attracted by the toys displayed shown in movies
- High concentration of population
- The target market or toddlers’ ratio is high in the country
- A large number of communication channels including broadcast media and social media advertising can be used for the promotion as the number of internet users is high in the country
Channel of Distribution:
- It is a country with a large geographical area; therefore, the company needs to strategically decide the distribution mediums
- The market of India is an attractive market due to the high purchasing power of the customers.
- A recent demonetization has occurred in India which can fluctuate the international value of the Indian currency (Halligan, 2014).
Control and Coordination:
- The government control on the industry is medium as India is mixed economy
- The organization has a strong presence and brand name in India (Lomax and Raman, 2007).
- The company is committed to deliver what it promises in terms of quality and service.
- It can compete with local competitors be delivering effective quality and value to the customers.
- The choice refers to the suitability of the marketing mix for the product as well as the target market and familiarity of the marketing mix with the companies.
- The contractual obligations refers to the set of laws and the legislations which can impact on the payment terms, conditions, warranties and the guarantees of the target market.
- Developed Country
- Favorable Trading Conditions
- People are attracted towards new and stylish toys
- Being a developed country, Russia has a well-developed infrastructure for communication
- Although Russia is a large country, the concentration of population is quite low. Moreover, the ration of toddlers and young children is also low due to declining birth rate in the country (Doole and Lowe, 2008).
Channels of distribution:
- Since it has a very large geographical area, the company will require to use a large number of distribution modes for effective distribution
- The purchasing power of the customers is high as Russia is a developed economy
Currency Control and Coordination:
- It is a free economy and the trade regulations are limited in number
- The company can use different marketing mix strategies according to the target customers.
- The country has well-formulated laws regarding the warranty, customer privacy and procurement activities
- It refers to small details which can drastically impact on the business of the organization
- The organization has a strong work culture
- It is dedicated to provide the best quality products at reasonable prices
- Developing country
- Low economic growth
- Limited geographical area and population
- The African toy industry is growing and the children are attracted towards African themed toys (Nsehe, 2015)
- The company has a satisfactory infrastructure which can be used for communication and transportation
- The concentration of population is relatively high which increases the market attractiveness
- The organization is committed to provide effective services to the customers
Channels of distribution:
- The company can use road transportation, waterways and railway freight for effective transportation
- The economy of the country is showing little growth and the inflation rate is high. It reduces the capacity of the customers.
- The currency of the country is stable
Control and Coordination:
- The country has a semi-presidential rule and a large number of rules and legislations are formed to control the toy industry.
- There are a number of choices related to marketing and advertising to the target customers.
- The company has to abide by the contract laws and legislations in the country
- It is a small country and the company will ave limited number of customers
- The company must examine the legal policies, taxation and the economy of the country before venturing into the foreign markets.
- It is democratic in nature and have developed attractive policies to attract foreign investment.
- The culture of country impacts the purchasing pattern of its citizens.
- Several cultures focus on the group needs and avoid buying toys for individual customers. It can impact on the purchase rate of the toys.
- The company should analyze the age distribution, income and the population density of the target market.
- Although population concentration is high, the purchasing power of the customers is low.
- The communication channels refer to the available communication and media channels for the broadcast.
- The company needs to select the communication channel which is commonly is commonly used by the public and the target customers.
- The concentration of the population is high
Channels of distribution:
- It has well-developed infrastructure for telecommunication and transportation
- The capacity of the customers is low due to the relative less growth of the economy.
- The currency of the country is stable.
According to the market attractiveness analysis, it can be stated that India has the maximum potential as a target market. The country has majority of young population which are the major buyers for the company as well as high purchasing power. It is well-develop in terms of infrastructure and communication medium so that the organization can easily develop is set-up in the country.
Appropriate Entry Mode in Target Market
After the selection of the potential target market, the company needs to select the mode of entry which is suitable for the organization. There are a large number of foreign market entry modes such as direct exporting, agreement with foreign countries, joint ventures and licensing. In the present context, the market entry mode of joint venture will be the most suitable for the company. The company can accumulate the local market knowledge with the local partner and use its core competency to establish the market in India. The country has effective transportation system and infrastructure which will assist the organization in developing set-up in the foreign country (Carr and Nanni, 2009).
Analysis of Socio-cultural factors and Appropriate Marketing Mix for Toys R Us
There are numerous socio-cultural factors which can impact on the performance of firm in a foreign nation. The Indian customers are emotional and family oriented in nature; therefore, it is essential that the organization develop marketing mix inspired from the nature of the target customers.
Product: The Company can introduce the product inspired from the local superheroes and movie characters to increase customer base. It should also conduct market research to examine the current market preferences.
Price: It is examined that the purchasing power of the customers is high in India; therefore, it should decide the price of the products appropriately according to the quality of the products.
Promotion: It should device a promotional strategy in alignment with the preference and the taste of the consumers.
Place: As the company is entering through a joint venture, it should extend the product to all the major cities of the country initially (Applegate and Johnsen, 2007).
It can be concluded that the international marketing is a strategic growth action which requires extensive planning. The international market of India has been selected through the 12 Cs framework. In the report, the external and the internal environment of the organization have been analyzed and an appropriate market entry mode has been selected for the market. The marketing mix for the company is new target market is also presented in the report.
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