Analysis Of The Indian Toy Market Marketing Essay

The name LEGO is an abbreviation of the two Danish words leg godt, intending drama good. The LEGO Group is a in private held company based in Billund, Denmark. It was founded in 1932 by Ole Kirk Kristiansen. The company has passed from male parent to boy and is now owned by Kjeld Kirk Kristiansen, a grandchild of the laminitis.

It is engaged in the development of kids ‘s creativeness through playing and acquisition. Based on the world-famous LEGOA® brick, the company today provides playthings, experiences and learning stuffs for kids in more than 130 states. The LEGO Group has about 10,000 employees, and it is the universe ‘s 3rd largest maker of drama stuffs.

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It has come a long manner over the past about 80 old ages – from a little carpenter ‘s workshop to a modern, planetary endeavor that is now, in footings of gross revenues, the universe ‘s fourth-largest maker of playthings.

The LEGO brick is their most of import merchandise. They have been named – “ Plaything of the Century ” – twice. Their merchandises have undergone extended development over the old ages – but the foundation remains the traditional LEGO brick. The brick in its present signifier was launched in 1958. The meshing rule with its tubings makes it alone, and offers limitless edifice possibilities. It ‘s merely a affair of acquiring the imaginativeness traveling – and allowing a wealth of originative thoughts emerge through drama.

( Beginning: LEGO.com )

LEGO ‘s merchandises:

They are fundamentally divided into merchandise lines:

Chima, City, Star Wars, Friends, Videogames, Duplo, Ninjago, Marvel Super Heroes, DC Universe Super Heroes, Lego Master Builder Academy, Lord of the Rings, Hobbit, Hero Factory, Nickolodeon Teenage Mutant Ninja Turtles, Architecture, Monster Fighters, Technic, Heroica, Games, Lifestyle, Disney Pixar Cars, Dino, Minifigures, Bricks & A ; More, Creator, Galaxy Squad, Pharaohs Quest, Racers, Mindstorms, Power Functions, Nickolodeon SpongeBob Squarepants, Life of George, Kingdoms.

These merchandise lines so have a batch of merchandises within each merchandise line.

( Beginning: LEGO.com )

LEGO won market portion in 2011 as net income jumped 32 per centum, boosted by its new Ninjago building-block sets. Net income in the first six months of the twelvemonth rose to 1.48 billion DKK from 1.12 billion DKK in the same period of 2010, harmonizing to a company statement released in 2011, and besides reported in Bloomberg.com.

The article dated Aug 30, 2011, and headlined ‘Lego Wins Toy Market Share as Profit Jumps 32 % on Ninjago Sets ‘ , farther says: “ Lego grew at more than double the gait of its two biggest challengers as first-half gross jumped 25 per centum to 7.36 billion DKK while the planetary plaything market grew by about 2 per centum in the period. Mattel Inc. ( MAT ) and Hasbro Inc. ( HAS ) , the universe ‘s largest toymakers, last month reported gross revenues growing of 11 per centum and 12 per centum severally for the same period. Lego said it increased its market portion to 7 per centum compared with 5.9 per centum for the whole of 2010 and 4.8 per centum in 2009. ”

( Beginning: hypertext transfer protocol: //www.bloomberg.com/news/2011-08-30/lego-wins-toy-market-share-as-profit-jumps-32-on-ninjago-sets.html )

The cardinal markets include: North America, most of Europe, Australia and now, even China. However, LEGO wants to spread out its planetary footmarks by doing a presence in emerging markets and explore and work new consumer sections within established and emerging markets.

In other words, the company is looking at ways to increase market portion in established markets while seting up a construction in topographic point for presenting an thought to the shop shelves in new or emerging markets.

So, I want to happen out the range for such a large participant to come in in the immense market of India. I would happen out some statistics sing growing tendencies and year-on-year growing curves to establish my analysis up on. A company would be better armed with the consumer penetrations and tendencies shown in the analysis and program about establishing advanced and safer merchandises consequently.

1.2 Management inquiry

The direction would be concerned with these inquiries:

How can LEGO capitalise on the immense market potency of India to go a market leader?

How to happen the premium mass consumer section in India and be able to sell LEGO merchandises to them successfully?

Based on the Ansoff Growth matrix used as a tool to visualize different growing schemes, the direction of LEGO could be told to contract down to two options:

Merchandise development: Produce some new Indian-ized merchandise lines for the Indian market, if that would assist catch the consumer attending.

Or

Expansion: Just focal point on puting up supply ironss and logistics in the large tube with a planned stage out across remainder of India ( read tier II and tier III metropoliss ) with the bing merchandise lines.

Figure: Ansoff Growth Model

Beginning: hypertext transfer protocol: //www.smartdraw.com/examples/view/ansoff+matrix+chart/

1.3 Problem preparation

To organize an apprehension of the complex Indian consumer market and demands.

To understand the Indian industry ordinances and range to go market leader.

To gauge the costs and benefits of both options.

Whether to follow an aggressive selling attack or travel for a soft launch to run into less opposition from other large plaything shapers.

2 Analysis of the Indian plaything market

2.1 Research inquiries

The undermentioned research inquiries will be addressed:

An overview of the current Indian plaything market state of affairs

The expected current market size and future projections for market growing? Scope for future growing in the following 10 old ages?

An overview of tendencies and merchandise releases

Which new playthings would be preferred by consumers in this mostly traditional plaything market?

Would new retail shop formats be preferred for providing to aim group?

Which advanced merchandise lines could LEGO come up with to link with Indian kids?

2.2 Datas beginnings

The undermentioned secondary beginnings have been used to near the posed research inquiries:

Euromonitor Global Market Information Database ( GMID )

LEGO.com

bloomberg.com

economictimes.com

tai-india.org

Assorted beginnings

2.3 Market analysis consequences

India 2012: Status, mentality and tendencies

India is a state of 1.2+ billion people ( the second largest populated state in the universe ) with a burgeoning in-between category that lifting aspirations and increasing income and instruction degrees. India is a immense market for playthings and games of all assortments. Twenty per centum of the population is in age group of one to twelve old ages. As the state develops quickly, so does the buying power of its people. It is a good consumer market with nice instruction degrees and English talkers feeding non merely on Indian amusement channels but besides on the Western amusement orbiter channels. The authorities of India is giving drift to larning through playthings via several undertakings and strategies.

There are several articles on Euromonitor that show a positive growing tendencies and potency for the plaything industry in India.

An article dated 11 Jan 2007, with the headline: ‘Asian parents look to give their kids a headstart ‘ , says:

“ An mean Asiatic middle-class, upwards nomadic household is characterized by concerns for their kids ‘s instruction. Competition for success is really intense and parents strive to assist their kids ‘s instruction from a really immature age by engaging private coachs and pull offing leisure clip. From India to Singapore, China, Japan and South Korea, the demand to give kids a headstart is a strong parental concern.

This is clearly reflected in the growing of pre-school and activity/construction plaything gross revenues in south and south-east Asia. Among the 30 states under survey, the seven states classified as Asia/Australasia history for 18 % of entire traditional plaything and games gross revenues in 2006. However, they account for every bit much as 42 % of pre-school plaything gross revenues. Their part is expected to lift to 46 % by 2011. This part is expected to impel activity/construction plaything gross revenues as good doing it the individual largest subsector catching dolls/figures. The Asia-Pacific states will lend 31 % to activity/construction gross revenues by 2011, up from 23 % in 2006.

As parents are the decision-makers for these plaything purchases, they need to be impressed with the educational demand of these playthings. As richness in this part increases, gross revenues will travel from the little, unbranded sector to better quality branded merchandises, taking to higher degrees of growing. ”

Another article highlighted the demand for branded plaything and increasing consciousness sing toy safety in India.

Headlined ‘New Toys and Games Research: What is it Stating Us? ‘ dated 17 June 2011, the article revealed a “ gradual displacement in retailing influence to newer channels, the success or otherwise, of trade name extension schemes, and the worlds of happening growing farther afield. ”

The research findings province:

Asia Pacific is all set to excel North America ( the largest picture games market globally ) to go the largest traditional plaything market by 2015 “ thanks to phenomenal growing in India and China. Projected diminution in Japan will be offset by the emerging economic systems in the part.

Traditional playthings and games managed a 6 % addition in value gross revenues in 2010 with building the most dynamic class ( 12 % ) thanks in no little portion to LEGO ‘s phenomenal public presentation.

As drama value becomes progressively of import, cash-strapped parents seek plaything that will last while promoting imaginativeness. LEGO played to its strengths with continued invention in its launches while back uping its authoritative lines with major licences – lending to a addition in traditional playthings and games of about 1.5 per centum points in merely two old ages.

Mattel is the largest and best known traditional plaything company in the universe, with 13 % portion of planetary traditional playthings and games market in 2010. However, while it controls more than a fifth of the toys market in Latin and North America, its laterality is much lower in other universe parts, such as Eastern Europe where LEGO Group leads, and Asia Pacific where the top musca volitanss are taken by BANDAI NAMCO and Takara Tomy. ”

Specifically, India, Chile, Argentina, Brazil and South Africa were the industry ‘s fast growing markets, all entering more than 24 % value growing in 2010, harmonizing to the article.

It mentions that “ in India, branded toys benefited from bettering disposable incomes among the in-between category, bettering handiness and advanced merchandise launches from both domestic and international participants. In contrast, non-branded plaything gross revenues were hampered by stricter quality ordinances on imported Chinese playthings, every bit good as turning consciousness of toy safety issues by and large. ”

Harmonizing to Toy Association of India, Indian plaything industry manufactures toys deserving INR 2,500 crore and is turning at a steady rate of about 15 per centum every twelvemonth.

( hypertext transfer protocol: //articles.economictimes.indiatimes.com/2012-08-11/news/33153119_1_indian-toy-toy-association-toy-manufacturers )

The childs ‘ market in India is estimated to be at INR 26,000 crore of which the plaything section entirely comprises INR 5,000 crore. About INR 1,700 crore of this is organised, which is majorly captured by Chinese merchandises. Now on a growing way, registering a year-on-year growing of 35 per cent, the domestic market is set to touch INR 11,500 crore by 2014.

( hypertext transfer protocol: //www.business-standard.com/article/companies/toys-e-tailing-gains-steam-112101500021_1.html )

The domestic plaything industry is extremely disconnected, unorganized and is preponderantly dominated by micro, little and medium-scale makers. About 70 % of the plaything market in India is unorganized.

( hypertext transfer protocol: //www.thehindubusinessline.com/industry-and-economy/article2785113.ece )

Hamleys, Simba and Hape are merely some of the trade names that have come in late, even as a whole host of others, including Brio, will hit store shelves in hebdomads and months to come. “ The fact that the organized plaything market in India is little is an added advantage. Besides, India has one of the largest babe populations, which spells an chance for plaything companies. ”

( hypertext transfer protocol: //www.dnaindia.com/money/report_digital-shift-pushes-toy-brands-to-india_1804052 )

Some more facts and figures:

Market Sizes | Historic | Retail Value RSP | a‚¬ mn | Current Prices | Year on Year Exchange Rates | Growth Index

Geographies

Classs

2006

2007

2008

2009

2010

2011

A

A

India

Baby ( 0-18 months )

100.0

126.7

134.5

152.5

203.4

230.6

India

Infant ( 19-36 Calendar months )

100.0

125.5

145.9

183.6

272.1

325.5

India

Pre-School ( 3-4 Year Old )

100.0

125.6

144.0

176.5

254.9

305.6

India

Action Figures and Accessories

100.0

120.8

126.9

146.2

198.1

250.5

India

Construction Toys

100.0

103.4

104.8

113.6

144.8

153.7

India

Games and Puzzles

100.0

114.2

115.3

123.0

153.4

161.8

India

Radio/Remote Control Toys

100.0

112.0

114.2

127.3

167.6

190.0

Research Beginnings:

Toys and Games: Euromonitor from trade sources/national statistics

Date Exported ( GMT ) : 17/01/2013 19:58:11

A© Euromonitor International

Market Sizes | Historic | Retail Value RSP | a‚¬ Per ‘000 Households | Current Prices | Year| on| Year Exchange Ratess

Geographies

Classs

2006

2007

2008

2009

2010

2011

A

A

India

Baby ( 0-18 months )

12.3

15.3

16.0

17.9

23.4

26.1

India

Infant ( 19-36 Calendar months )

21.4

26.4

30.2

37.4

54.5

64.2

India

Pre-School ( 3-4 Year Old )

50.0

61.6

69.5

83.7

119.0

140.4

India

Action Figures and Accessories

4.3

5.2

5.3

6.0

8.0

10.0

India

Construction Toys

22.8

23.1

23.1

24.6

30.8

32.2

India

Games and Puzzles

133.3

149.7

148.4

155.8

191.1

198.3

India

Radio/Remote Control Toys

63.8

70.3

70.4

77.2

100.0

111.6

Research Beginnings:

Toys and Games: Euromonitor from trade sources/national statistics

Date Exported ( GMT ) : 17/01/2013 20:00:57

A© Euromonitor International

Market Sizes | Historic | Retail Value RSP | a‚¬ mn | Current Prices | Year| on| Year Exchange Rates | Period Growth

Geographies

Classs

2006-11 %

2006-11 CAGR %

2006-11 Absolute

A

A

India

Baby ( 0-18 months )

130.6

18.2

3.4

India

Infant ( 19-36 Calendar months )

225.5

26.6

10.2

India

Pre-School ( 3-4 Year Old )

205.6

25.0

21.7

India

Action Figures and Accessories

150.5

20.2

1.4

India

Construction Toys

53.7

9.0

2.6

India

Games and Puzzles

61.8

10.1

17.4

India

Radio/Remote Control Toys

90.0

13.7

12.1

Research Beginnings:

Toys and Games: Euromonitor from trade sources/national statistics

Date Exported ( GMT ) : 17/01/2013 19:57:34

A© Euromonitor International

Market Sizes | Historic | Retail Value RSP | a‚¬ mn | Current Prices | Year| on| Year Exchange Rates | Year| on| Year Growth ( % )

Geographies

Classs

2006-07

2007-08

2008-09

2009-10

2010-11

A

A

A

India

Baby ( 0-18 months )

26.7

6.1

13.4

33.4

13.4

India

Infant ( 19-36 Calendar months )

25.5

16.3

25.8

48.2

19.6

India

Pre-School ( 3-4 Year Old )

25.6

14.7

22.6

44.5

19.9

India

Action Figures and Accessories

20.8

5.1

15.2

35.5

26.5

India

Construction Toys

3.4

1.3

8.4

27.5

6.1

India

Games and Puzzles

14.2

0.9

6.7

24.7

5.4

India

Radio/Remote Control Toys

12.0

2.0

11.5

31.7

13.4

Research Beginnings:

Toys and Games: Euromonitor from trade sources/national statistics

Date Exported ( GMT ) : 17/01/2013 19:56:38

A© Euromonitor International

Market Sizes | Historic | Retail Value RSP | a‚¬ mn | Current Prices | Year| on| Year Exchange Ratess

Geographies

Classs

2006

2007

2008

2009

2010

2011

India

Baby ( 0-18 months )

2.6

3.3

3.5

4.0

5.3

6.0

India

Infant ( 19-36 Calendar months )

4.5

5.7

6.6

8.3

12.3

14.7

India

Pre-School ( 3-4 Year Old )

10.5

13.2

15.2

18.6

26.9

32.2

India

Action Figures and Accessories

0.9

1.1

1.2

1.3

1.8

2.3

India

Construction Toys

4.8

5.0

5.0

5.5

7.0

7.4

India

Games and Puzzles

28.1

32.1

32.4

34.6

43.2

45.5

India

Radio/Remote Control Toys

13.5

15.1

15.4

17.2

22.6

25.6

Research Beginnings:

Toys and Games: Euromonitor from trade sources/national statistics

Date Exported ( GMT ) : 17/01/2013 19:54:36

A© Euromonitor International

2.4. Discussions and preliminary decisions

It is clearly a really large chance for LEGO. Since there is so much growing potency that has been so less explored so far and a really little portion of the market is organized, calls for LEGO to believe earnestly about spread outing its footmarks in the Indian market.

New merchandise thought

Opportunity designation

In the background of all these findings, it becomes imperative to sharply come in the Indian market and set efficient supply ironss in topographic point for the company to expeditiously be able to present across the large geographical part without adding to the stock list. Besides, there should be focus on explicating the safety involved in bring forthing LEGO ‘s plaything to an Indian parent, concerned about his/ her kid ‘s safety.

3.2. Positioning statement

The placement statement for LEGO in India could be: “ Infinite creativeness for your kid. ”

Further, as India has several regional linguistic communications, this placement statement could be translated into the several regional linguistic communications excessively ; although non wholly necessary given that English is the official linguistic communication of India and our clients would wish to read it in English.

3.3. Merchandise construct

The merchandise construct is that kids can unleash their creativeness with the LEGO bricks and construct whatever they want. The possibilities are many. Besides, it is an edu-tainment for them, which helps them use their custodies and caputs both to do something constructive, as opposed to the destructive picture games popular now.

Research undertaking lineation

The end of this proposed research undertaking is to look into selling information and be able to deduce the investing hazards by traveling to a more educated determination base and ease a go/ putting to death determination about the present options.

The research undertaking has double ends – look into both growing chances: a ) bring forthing some new Indian-ized merchandise lines for an aggressive entry into the Indian market, or B ) enlargement programs in India with the bing merchandise lines.

4.1 Research inquiries

4.1.1. Introduction of new India-centric merchandise lines for the consumers

Should they be made on popular Indian sketch film characters like Bal Ganesh, Krishna and Balaram, Chotta Bheem, Bal Hanuman, Ramayana, etc. , that have captured the imaginativeness of a new coevals of Indian kids?

Or characters from Bollywood films made for kids like Ra.One, Krissh, etc. that besides have strong selling power and entreaty among kids?

4.1.2. Expansion programs in India with the bing merchandise lines

Should a production unit be set up locally to run into the expected future demand?

If yes, what are the local ordinances? Which province of India would be most suited in footings of political political orientation of the province authorities in power in relation to foreign investing?

Besides the province ‘s substructure, propinquity to ports and railheads, manpower demands and ruddy tape, etc. ?

How should the supply concatenation direction be put to work expeditiously across a huge state like this?

Who are the chief rivals in the organized plaything market section?

Opportunities and menaces in the market. Trade barriers or conditions, if any.

4.2 Participants and processs

An explorative research design including a qualitative and quantitative constituent is proposed.

4.2.1 Introduction of a new merchandise line in the new market

To look into the opportunity of success for the new merchandise lines and to imagine on which of them to travel in front with ; how that merchandise household could be composed, etc. , a qualitative focal point group would be needed and treatments will be organized.

A professional moderator will take the treatment, aided by an observing helper. All the treatments will be videotaped.

Three focal point groups with respondents belonging to the in-between category, upper in-between category and the luxury category of purchasers would be composed pulling respondents from different tubes in India. The three focal point groups ‘ treatments will be followed by a pilot launch in top of the line retail shops in the rich pockets of Mumbai and/or New Delhi, in connexion with the new merchandises ‘ perceived quality and entreaty.

The consumers ‘ response to this could pave a manner for traveling in front with this program.

4.2.2 Expansion with bing merchandise lines

A market research company should be employed to analyse secondary informations and sum up the findings into a Pestel analysis. Data beginnings to be used can be intelligence studies, articles, trade statistics and computerized databases. A measure farther would be to carry on interviews with a figure of parents in the Socio Economic Category ( SEC ) A and B in the Indian tube, to organize an thought of possible involvement in and purchase purposes of LEGO ‘s bing merchandises. This will give a just thought of what will work in the close hereafter for the Co.

4.3 Concepts and steps

4.3.1 Introduction of new merchandise lines

The undermentioned subjects and narrations will be paid attending to during the focal point group treatments. The subjects will so be deconstructed into identifiable subcategories.

Toy types – which were mentioned?

Cartoon or Bollywood characters – which were mentioned?

Combinations of both

Were any specific associations made between the two?

How many times was a certain combination mentioned?

Discourses used when speaking about them: Television, film halls, attitudes, reappraisals, treatments about what kids discussed in their schools sing these two.

4.3.2 Expansion program with bing merchandise lines

A little choice of Indian metropoliss ( 2-3 ) will be selected based on LEGO ‘s perceptual experience of possible receptivity and assessed on the following seven concepts with related steps.

Market Potential

Population size

Local plaything makers

Presence of other world-wide plaything industry leaders

Market Growth Potential

In GDP

In gross revenues per capita

Market Handiness

Import duties

Availability of local gross revenues cooperation partner/ distribution channels

Pricing

Marketing/advertising patterns

Economic Factors

Exchange rate development

Political Factors

Trade barriers

Attitude towards imported merchandises

Attitude towards large foreign companies

Overall political clime in the state and provinces

Government stableness

Cultural Factors

Health attitudes

Attitudes towards playthings

Geographic Factors

Distance

Meanss of transit

( John R. Jagoe ‘s Export Gross saless and Marketing Manual www.tradeport.org )

4.4. Planned analysis

4.4.1 Introduction of new merchandise lines in the market

The treatments with the three different focal point groups will be transcribed. The picture recordings will be scanned and observed closely to look for gestural communicating. The perceiver ‘s notes will be taken note of. The transcripts will be analyzed utilizing a descriptive phenomenological attack.

4.4.2 Market enlargement with bing merchandise lines

Both the quantitative and qualitative informations will be analyzed and summarized in a Pestel model for each metropolis and so for pulling decisions about the overall Indian market.

All the political, economic, legal, environmental, societal, technological factors would be considered harmonizing to the Pestel model.

In order to make up one’s mind the most profitable province within India to establish the merchandise in, each option will be assigned values for each leaden concept. The options will be ranked and the option with the highest value points will be chosen.

5. Making the determination

5.1 Either/ or – which determination will do more sense in the current scenario

In this instance, the LEGO direction will hold to make up one’s mind between two options, i.e.

presenting one or more new merchandise lines before come ining the Indian market

or

utilizing the bing merchandise lines for the large launch in India.

To do this determination, a thorough cost-benefit analysis should be made utilizing a value tree sing several cost properties like land handiness and costs, land acquisition issues and legal fee ( if the land has full or a large ball of agricultural country, it could take to legal differences ) , natural stuff, transit, revenue enhancements, labour, cost of new machinery and cost of packaging. Profit properties to be measured are closeness to aim metro metropoliss, substructure like main roads or railroads, and consequence on production processs.

If direction finds that a cost-benefit analysis is non adequate to do the determination, a public-service corporation map can be applied to doing the pick between exports or merchandise debut, where the possible net income is estimated based on expected gross revenues volume and where chances are estimated based on historical gross revenues informations in the market of pick. ( Goodwin & A ; Wright 2010, pages 121-122 )

5.2 Go/No-go

Should LEGO ‘s direction decide to travel with alternate B ) utilizing the bing merchandise lines for the large launch in India, a checklist will be used to assist do the Go/ No-go determination at different points in clip with respect to the phases of development, launch and gross revenues procedure of its merchandises.

Phase

Standards

Yes

No

Pre-

launch

1

Fits with strategic model of LEGO

Travel

No-go

2

Market chance recognized

Travel

No-go

3

The enlargement in new market is technically executable with the available resources merely, in the close hereafter

Travel

No-go

4

Estimated to suit within the pre-set break-even period

Travel

No-go

Launch

5

Customer credence – 6 month ‘s interim gross revenues study shows steady gross revenues addition

Travel

Withdraw

6

Fiscal public presentation – break-even period holds one twelvemonth after launch

Travel

Withdraw

( Carbonell-Foulquie, Munuera-Alema, RodrA±guez-Escudero, 2004 )

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