1.0 Introduction
It is important to critically scan the macro environment before producing a product or expanding into new market or region. Moreover, the detailed analysis of the marketing strategies helps to correctly identify and target potential customers (Cant, Strydom, Jooste and Plessis 2009). This report will briefly discuss the macro environmental scan and marketing strategies which will be followed by detailed recommendations.
2.0 Product Description
The product is the toy that will be especially launch for the occasion of Christmas and will be branded under the name of “Santa Christmas Spin”. The top will spin along with a Christmas song. Moreover, the toy will be a Santa Clause with bright colours that will quickly attract the customers. The Santa (top) will be pushed downward as it will use a button built in the toy that will make the Santa Clause spin with the music. In addition, upon spinning the light from the Santa’s head will be thrown up to the ceiling where the Santa Clause will be shown spinning along with the background of snowing and Christmas tree as explained roughly by figure b (assume the flower in the picture to be Santa Clause and lights to be the background scene defied for the toy). The following is the rough picture of the toy, i.e., “Santa Top for Christmas” (figure a).
Figure a (Ruby lane n.d.)
Figure b
3.0 Macro Environmental Analysis
A PESTLE analysis is important for any organization as it helps to find out the relevant external factors. In addition, the PESTLE analysis also helps an organization to find out the impact that these different external factors have or may have on their product and services (Cadle, Paul and Turner 2010). Moreover, the PESTLE analysis also enables an organization to find out the relative importance of each of these factors to the organization. Thus, the PESTLE analysis helps an organization to formulate its future strategies on the basis of the external or macro environment (Cheverton 2005). The elements of the PESTLE factors include political, economical, social, technological, legal and environmental factors. The following is the PESTLE analysis of the “Santa Top for Christmas”.
3.1 Political Factors
The political factors include industry specific regulations, war, political trends, terrorism, governmental leadership, competitive regulations, and taxes etc (Cadle, Paul and Turner 2010). The United Kingdom has a stable economy, i.e., the region is not currently engaged in war or terrorism that encourages new market entrants to enter the market. In addition, the United Kingdom is governed by a parliamentary system and constitutional monarchy (Cheverton 2005). In addition, one of the major issues in starting business in UK is the lack of efficiency in the government bureaucracy because of the many imposed regulations and inefficient spending by the government. However, recently George Osborne said that the tax rates on the business will be reviewed (BBC 2014). This will provide small medium enterprises with better tax rates to increase business in the region. Nonetheless, there is minimal corruption that further encourages new entrants to start business in the United Kingdom. In addition, the country is also the member of different economic, political and trade unions internationally that includes European Union, Commonwealth, OECD, IMF, ONU and WTO.3.2 Economic Factors
The economic factors refers to the government spending levels, unemployment or job growth, disposable income, production levels, consumer confidence index, exchange rates etc (Cadle, Paul and Turner 2010). The GDP of UK is $2.521 trillion as of 2013. However, the inflation rate is moderate, i.e., 1.3% (BBC News 2014). In addition, UK tries to have most efficient framework to control the intensity of rivalry and obligation of anti-monopoly policies in the country. Moreover, the country has high efficiency of labour market with qualified labour force; however, still the unemployment rate is 6% (Monaghan and Inman, 2014). In addition, the currency i.e., 1 British Pound Sterling is equal to 1.26 Euro. Moreover, the consumer confidence index has decreased to -2 (Gfk 2014). This means that the “Santa Top for Christmas” can take advantage of the region’s economic factors, i.e., availability of labor, low unemployment rate, etc as these are in favor of the business.
3.3 Social and cultural Factors
The social factors mainly include the demographics (gender, age, family size, race, etc.), population shift, lifestyle changes, fads, education, diversity, trends, living standards, fashion, and leisure activities, etc (Cheverton 2005). With respect to toy industry, there has been a huge shift as now the customers prefer buying more sophisticated technology products, i.e., games consoles, tablets and iPods, rather than buying traditional toys (Retail Week 2013). Moreover, the trend is now favored to use social media and internet to play games. According to a research by Henry J. Kaiser in 2012 found that the more teens and children of age group 8-18 prefer spending more than seven hours throughout the week in consuming media such as social media, blogs, videos, games, etc for their leisure activities that leaves no time to play with the traditional toys (Rideout, Foehr, & Roberts, 2010). In addition, according to Riley (2010), the children between the age group of 8-12 constitute nearly 31% of the total toys market. Moreover, the cultural trend of playing with traditional toys still exists that encourages traditional toy producers to produce different toys. This means that there is a huge potential in the toy market to introduce “Santa Top for Christmas”.
3.4 Technological Factors
The technological factors refer to the new discoveries, inventions, research, communication, manufacturing advances, internet, information technology, transportation efficiency etc (Ranchhod and Marandi 2006). The United Kingdom is most known as for its innovation-driven economy because of its technological readiness and innovation (Tech UK 2014). The important contributing factors to the UK technological environment include technologies and necessity of the research & development that led the organizations and industries to produce quality and innovative products. With respect to the toy industry, some toys that quickly come and go are called fad toys such as Christmas toys that disappear as soon as they are introduced. Moreover, due to increased technology and innovation emphasis, the companies operating in toy industry constantly hope to identify their breakthrough.
3.5 Environmental Factors
The environmental factors refer to the concern for environment while producing products (Cadle, Paul and Turner 2010). The UK environment focuses on production of more recyclable toys. In addition, the country legislations largely emphasize on reduced carbon foot print in production and packaging. Moreover, the Department for Environment, Food and Rural Affairs (DEFRA) operates as a government organization that creates legislations and policies in different areas to ensure sustainable green economy and protect environment (Gov.UK 2014).
3.6 Legal Factors
The legal factors includes the legal legislations around which the industry and organization operates (Ranchhod and Marandi 2006). In UK, there are four main source of law that includes legislation, European Union law, common law, and European Convention with respect to Human Rights. In addition, the increased burden of value added tax has also somewhat affected the consumer’s and industry’s spending on the products and services. Besides this, United Kingdom has confirmed the Companies Act 2006 which functions as a legislation to make easier the society’s creation and business environment. However, particularly with respect to toy industry, due to children safety standards, it is important that organizations in the toy industry must ensure safety in the manufacturing and designing of the toys according to the BTHA and meet toy standards, i.e., EN 71 and/ or EN 62115 (British Toy & Hobby Association 2014).
4.0 Marketing Strategies
The following are the discussion of marketing strategies for “Santa Top for Christmas”.
4.1 Segmentation, Targeting and Positioning (STP) Strategies
In order to develop marketing strategies, it is important to analyze segmentation, target and positioning for the “Santa Top for Christmas” that will help to provide long term growth and strategic direction (Cant, Strydom, Jooste and Plessis 2009). The following is the strategic analysis with respect to STP strategies.
4.1.1 Market segmentation
The market segmentation refers to the grouping of different consumers into the segments with respect to their common need or the response to the promotion activities (West, Ford and Ibrahim 2010). The following is the market segmentation for the “Santa Top for Christmas”:
4.1.1.1 Demographics factors
The demographic factors revolve around the customer’s characteristics such as age, income bracket, gender, education, cultural background and job (Cant, Strydom, Jooste and Plessis 2009). For “Santa Top for Christmas”, the customers will include children between age 8 and 14 and the income of the parents will be minimum £12,000 per month. The children can be both male and female and will be at school level. Moreover, the parents of the children can belong to any industry or occupation. The target market includes both children and parents as often parents buy toys for children or sometimes children choose toys for themselves. In addition, the targeted children and their parents will be Christians who celebrates Christmas and usually buys toys of Santa Clause for the children.
4.1.1.2 Psychographics factors
The psychographic factors involve the lifestyles of the customer group and include characteristics such as attitudes, opinions, personality, lifestyles and social class (West, Ford and Ibrahim 2010). The targeted audience for “Santa Top for Christmas” will have positive attitude and opinions for the technology and prefer using technological and innovative products. Moreover, the social class will include middle class mainly but “Santa Top for Christmas” can be purchased by parents belonging to any social class. In addition, the lifestyle of the targeted audience will be trendy who like to buy new innovative products for children on the occasion of Christmas.
4.1.1.3 Behaviour factors
The behaviour factors involve the behaviour of customers to purchase the product such as shopping centres customers, online shoppers, and brand preference (Cant, Strydom, Jooste and Plessis 2009). The behaviour of the targeted audience for “Santa Top for Christmas” will be online shoppers and customers that go to shopping centres and toy stores.
4.1.1.4 Geographical factors
The geographical factors involve region or location such as country, continent, city, province etc in which the customer resides (West, Ford and Ibrahim 2010). The selected audience for “Santa Top for Christmas” will belong to United Kingdom. However, if the toy is successful in the UK region, then the market will be expended to other nearby countries in the next few years. 4.1.2 Targeting
Targeting strategies are based on the segmentation of the customers as one strategy cannot be used for different groups of customers (Kotler, Kotler and Kotler 2008). For the toy “Santa Top for Christmas”, concentrated targeting strategy will be used. The reason behind using this strategy is that it will directly target and focus on the particular market niche for which marketing efforts will be used (Lamb, Hair and McDaniel 2012). Moreover, as the toy “Santa Top for Christmas”, is based on a single segment, therefore use of this strategy will help to provide more understanding of the wants and needs of the selected customer market. In addition, this strategy will help the firm as initially it will be operating at small level that will help to compete with the large firm.
4.1.3 Positioning
The positioning refers to the development of brand and product image in consumer’s mind (Kotler, Kotler and Kotler 2008). Moreover, the positioning also includes the improving perception of customers about what they will experience by purchasing or using a particular product or service. As the “Santa Top for Christmas” is an innovative toy, therefore it is expected that the product will give positive and long lasting experience to the children. Moreover, the “Santa Top for Christmas” is capable to capture attention of children and engage them in a trance because of its Santa’s spin with music and lights that is thrown in the ceiling. Although, the increased influence of technology on children could make children less attracted to it, but the traditional charm of giving Santa toy as a traditional gift to children will make it worthy. In addition, the traditional addiction and relation between the grandparents with their grand children will further encourage them to purchase “Santa Top for Christmas” as a gift. However, still the “Santa Top for Christmas” will be accompanied with the effective and efficient marketing mix that will include and influence the customers to purchase the toy for the children. Thus, the effective positioning will provide understanding to the customers with respect to competing products and product benefits sought by the targeted market.
5.0 Recommendations
In order to correctly position the “Santa Top for Christmas” in the market, it is important that efficient marketing mix is created. Moreover, the use of efficient marketing mix will help to develop positive consumer experience. Thus, the following marketing mix is proposed for the “Santa Top for Christmas”.
5.1 Marketing mix for the “Santa Top for Christmas”
5.1.1 Product
The products or services that is offered to the customers that covers physical attributes, branding, packaging, benefits and how it differs from the competitors (Shanker 2002). The product “Santa Top for Christmas” will be a colorful spinning musical toy that throws light in the ceiling with Christmas tree and snowing along with the reflection of the dance of Santa Clause. Moreover, the toy will have a battery life of one year that will encourage parents to purchase the product for their children. The toy will be manufactured considering safety of children. In addition, the toy will meet the highest quality standards to ensure future growth. The product itself is an innovative product and therefore it doesn’t have any direct competitors; however, other toy manufacturing industries include LEGO, Ogel, Toys R etc. In addition, the “Santa Top for Christmas” will be sold in an innovative packaging like a gift box with the toy’s name. However, initially, the “Santa Top for Christmas” will be a seasonal toy.
5.1.2 Price
The pricing strategy refers to how the product will be priced that will maintain its competitiveness. Moreover, adapting appropriate prices of the products helps to increase sales revenue (Bowman and Gatignon 2010). The price of a product helps to determine what consumer perceives the value of product on sale. A price of the product must be appropriate in relation to the product that will encourage customers to purchase the product (Shanker 2002). However, the price can be varied according to the situation. The “Santa Top For Christmas” will be expensive as compared to other traditional toys as it will use best quality plastic that does not harm users. In addition, the toy is priced to meet the higher degree of workmen-ship devoted by the workers to produce the “Santa Top for Christmas”.
5.1.3 Promotion
Promotion refers to the methods that are used to communicate the benefits and features of the services and products to target consumers (Kemmer and Boden 2012). In addition, the promotion methods help to convey information to the customers that will persuade them to purchase the product (Baker and Saren 2010). To promote the product “Santa Top for Christmas”, different promotional methods will be used. In addition, as December is near, it is expected that the offer will help to attract large number of customers. Firstly, “Santa Top for Christmas” will be promoted through newspaper in an attractive way to inform target customers about the product. Secondly, the toy will also be marketed through flyers throughout the United Kingdom as it is one of the most convenient methods to inform those people who don’t read news paper and magazines. The use of flyers for promotion purpose will help to define the toy usage and creativity that will give pleasure to users. Thirdly, the product “Santa Top for Christmas” will be promoted through social media websites such as Face-book, and internet as it is most used medium by UK population. Videos and pictures of the toy will be uploaded on the social media websites to achieve greater promotion success. Fourthly, the ads will also be published in magazine such as Tesco and Asda magazines where the promotion will be on the cover page which will immediately catch attention of the readers as normally front page is read by all. Lastly, the “Santa Top for Christmas” will be launched with a large marketing campaign in the main street of UK that will also help to attract targeted children and parents. Display of “Santa Top for Christmas” will also help to capture targeted audience. The promotion using different means will cost approximately £50,000. Thus, it is expected that these promotional strategies will launch the product successfully.
5.1.4 Place
Place refers to the distribution of the products or services i.e., the location from where customers will have access to the product (Kemmer and Boden 2012). Place also includes the different methods of storing, transporting and distributing goods that helps to make product available on time and at the right place (Shanker 2002). The product “Santa Top for Christmas” will be made available in the main London as it is the biggest toy market in the UK. Moreover, the toy will also be made available in other areas of the country. In addition, it will be more opportune to sell “Santa Top for Christmas” to the wholesalers who will sell the toy to the small toy retailers or toy shops from where customers can directly purchase it. In addition, the “Santa Top for Christmas” will also be made available to large retailers such as Tesco and Wal-Mart across UK. Besides physical place, the “Santa Top for Christmas” will also be available for sale on different online shopping websites. In addition, customers can also directly place their orders on the personal website of “Santa Top for Christmas” where initial promotional discount such as free delivery will be offered to customers.
6.0 Conclusion
In summary, the external analysis shows favourable signs for the successful launch of “Santa Top for Christmas”. In addition, the segmenting, targeting and positioning strategies along with the efficient marketing mix (product, price, place and promotion) will contribute to the product success. Thus, the innovative product “Santa Top for Christmas” must be launched to bring smiles on the faces of children on Christmas.
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