Strategic Response for the Toys and Games Industry - Coursework Example

Strategic Response for the Toys and Games Industry Introduction Social media has recently emerged as one of the most commonly used method of communication among people across the world. Some of the commonly known social media sites are Facebook, Pinterest, MySpace, Twitter, Istagram and Tumbir. About 1.2 billion people use Facebook, and about 200 million people use Twitter worldwide. This high number of social media users forms a good market for business organisations across the world. Social media enhances communications between consumers in the market, and also enables companies to communicate with consumers. Therefore, the social media is an important marketing tool and an essential element of the promotion mix. It can be used to market goods in the toys and games industry. Essentially, toys and games are entertainment products while social media is richly entertaining; the two can be used together effectively. The purpose of this project is to explain how the social media can be used as a marketing tool in the toys and games industry. This will be achieved by examining the social media concept and the toy and games industry in details, and then explaining the impact of the social media marketing on the toys and games industry. Social Media Marketing in Perspective The social media is a consumer generated market for business organisations (Mangold and Faulds, 2009). It is a collection of online information sources that are created, circulated and used by consumers in order to communicate and educate each other. As a result, consumers share information about brands and products through the social media. The social media as a marketing tool has enhanced consumer behaviour through information dissemination, awareness creation, purchase behaviour, post-purchase communication, and consumer evaluation. The role of social media in marketing and promotion has recently become extremely significant. Successful integrated marketing communication enhances effective organisational performance and achievement of organisational objectives (Keegan and Green, 2005). For instance, companies may incorporate social media into their strategic principles and mission statements. Companies may use the social media to enhance their communications in the market in order to reflect their organisational values (Mangold and Faulds, 2009). The use of social media as a medium of communication has increased significantly over the past few years. The figure below shows that use of the social media as a medium of communication increased more than any other communication tool in 2012. Fig 1: Change in use of communication methods in 2012 (Ofcom, 2012) The social media enables companies to communicate with their customers and enables customers to communicate with each other (Kerr et al, 2012). It also allows customers to communicate with companies. Mangold and Faulds (2009) argue that in traditional communications, unsatisfied customer tells 10 people. However, owing to its huge following, social media is capable of causing greater impact. One unsatisfied customer may tell 10 million people. Similarly, one satisfied customer may tell 10 million people (Ryan and Jones, 2009). In essence, the social media allows customers to talk to each other about certain brands, companies, products and services. A company that has a substantial presence on the social media can therefore become a potential topic of conversation among customers. If such a company provides good products and services, customers will talk positively about it on the social media; hence the company will get more customers and its brand loyalty will also improve. Social media marketing improves brand awareness, enhances word-of-mouth advertising, increases customer loyalty, and improves the reach and influence of audience (Kincy, 2011). Through the social media, companies gain website traffic and attention from potential customers. This has a great impact on the strategic and marketing efforts of companies in various industries including the toys and games industry. The Toys and Games Industry The global toy and games industry earns total revenue of about $85 billion and is expected to grow further in 2014. Some of the key players of the industry include Namco Bandai (Japan), Lego (Denmark), Mattel (US), Sanrio (Japan), and Steif (Germany) (ECSIP Consortium 2013). The major product segments of Toy and Games industry include non-electronic toys, children’s vehicles, non-electronic games and puzzles, and electronic toys and games (Perez & Barkhurst, 2012). Therefore, this industry has an intense competition in various products. Mattel is the largest toy maker in the world, earning revenue of $10 billion in 2012 and recording a growth of 5.3% from the previous year’s revenue. There are various challenges encountered in the toys and games industry. With the changing and dynamic nature of children, faster maturity of children and changes in children’s population; the target market needs for toys and games industry are constantly changing. Furthermore, toys have a short life cycle and high rates of failure (Perez & Barkhurst, 2012). This limits the marketing of toys in the toys and games industry. The industry also faces seasonal in demand. For instance, in the US toys and games are demanded more in summer when parents and children are on holiday than in other times of the year when children are in school and parents are busy at their workplaces. Online games have also increased significantly over the past few years. Porter (2014) suggests that online games are forecasted to increase in absolute terms by about $4.7 billion. In US, the growth of revenue from online games is reducing because online games are adopting free-to-play systems. In China, the growth of revenue from online games is increasing because the China has adopted subscription model. The growth of online games revenue can be illustrated by the graph below. Fig 1: Growth of online games revenue in China and US (Porter, 2014) Consumer buying behaviour in the toys and games industry is often influenced by children (Perez & Barkhurst, 2012). Children often get information about toys and games through word-of-mouth advertising and they influence their parents to purchase their desired products. Therefore, toy and games companies manufacture toys and games that appeal to children. This depends on the age of children. Non-electronic toys are often targeted on young children before 5 years while non-electronic games and electronic toys are target on young children between five and ten years (Perez & Barkhurst, 2012). Children above ten years often prefer electronic games. Such children enjoy trending online games because they are ready by this age to explore a wide range of games including new online games. Online companies therefore maximize their earnings from toys and games by providing a variety of toys and games targeted on different market segments. Impact of Social Marketing on Toy and Games Industry In the current migration of business from the physical to the digital world, toys and games industry is not left out. As mentioned earlier, consumption of toys and games is always influenced by the demands and needs of children. Children often get information about toys and games through word-of-mouth advertising, TV and Radio advertising, displays, print media, etc (Perez & Barkhurst, 2012). They then pass the idea to their parents who in turn seek more information from online sources such as the social media. An interested parent may write a post on Facebook saying, “I saw a good toy son the TV called XYZ, I wonder whether it can be good for my daughter”. This will attract a heated conversation among parents and young adults on the social media. Another mother may reply, “Since I bought it from a Mattel shop, my child has never stopped smiling.” Definitely, the inquisitive woman in this case will buy the toy from Mattel. As a result, Mattel will be rewarded for providing quality toys. This is just an example of how consumer conversation in the social media can bring more customers to a company and influence brand loyalty and customer satisfaction. The social media can also motivate increase in sales if the company is engaged in conversations with various consumers through the social media. Companies can achieve this by creating contents about toys and games, and then allow audiences to share it with their social networks. If the shared message in the social media originates from a toy and games company such as Mattel, Lego of Sanrio and then shared by a trusted third party, it is likely to spread and resonate in the social media for a long time. This means that many potential customers will be aware of the product; hence they may buy the product from them. As gaming moves to online platforms, the social media becomes an essential tool of marketing online games. Online games companies can generate customer traffic by providing the links of their online games in most of their posts or messages on the social media. Due to the high number of social media users, there is a high chance that a potential customer will click on the link provided in such posts. For instance, Pinterest provides an opportunity for businesses to link their business websites to their pages on the social media (Weissman, 2013). As a result, visitors of Pinterest will be directed automatically to the websites of such companies. Therefore, social media users are directed to an online game whenever the link of the online game is provided to them on the social networks of the online game providers. Recommended Strategic Response The recommended strategic response for the toy and games industry is two-fold. While it is beneficial to advertise and communicate directly to consumers through the social media, it is also necessary to provide a platform within which the company can generate traffic and sales directly from the social media (Fox, 2009). This ensures that the toy and games industry can create awareness while at the same time making sales through the social media. The first part of this recommended strategic response is to create a social networking company account on Twitter and Facebook to be used for conversation among consumers, and between consumers and the company. These sites can be used specifically to communicate with existing and potential customers, and to create awareness about the existing toys and games available in the company. As a result, this will attract customers for the company. The second part of the recommendation is to create a Pinterest account that can be used to generate traffic and sales for the business. In order to attract enough customers and create awareness of new and existing products in the toys and games industry, companies should use three marketing tools in Facebook and Twitter. These tools are targeting, COBRA, and eWOM. Targeting involves marketing or advertising to the required target market (Cambria et al, 2011). In this case, a toy or games company can use its page or account on Facebook and its Twitter handle to post its marketing messages on forums of pregnant women and young mothers. There are various forums which allow women to come together share ideas on how to raise their children. Toys and Games Companies can participate in such conversations in the social media and include advertising messages about their products. COBRA is a short form of Consumer’s Online Brand Related Activities. Muntinga et al (2011) suggest that Cobra can be used to promote a company’s products. In this case, a toy company can upload images of its toys and provide a short description of the products including durability, how to use, and price on Facebook and Twitter. This is a way of communicating with consumers on the social media to create product awareness. eWOM refers to Electronic Word of Mouth (Kietzmann and Canhoto, 2013). This may be done by a toy and games company in form of online toys and games review on Facebook and Twitter. This allows enhances consumer-to-consumer conversation, allowing them to communicate and provide a review of the company. If the review is positive, then the company’s brand will become stronger and this will result in customer loyalty and retention. The second approach is to create a use blogs of popular people on Pinterest. In this case, a toy and gaming company can identify an entertainment personality with a lot of following on Pinterest and then use their blogs to generate traffic and sales, and then pay some commission to the blogger (Weissman, 2013). Pinterest works by allowing businesses to use pins enabled with metadata for the business to attach information about their products to images that people pin. By using blogs of people with a huge following, it is easier to sell more products because more followers means there will be more pins on the images of the blog; hence more potential customers will be able to view the message of the advertising company. Entertainment personalities should be used as a targeting strategy because people who are interested with games will pin images on entertainment blogs. Conclusion In the two strategies, it is clear that the first strategy of using Twitter and Facebook will be necessary to advertise products, attract customers, improve brand loyalty, and enhance customer loyalty and retention. On the other hand, using Pinterest will be necessary to generate traffic and sales for the company. Both approaches are essential marketing tools that enhance increased sales, market shares and profits. References list Cambria, E. Grassi, M., Hussain, A. and Havasi, C. 2011. “Sentic Computing for Social Media Marketing.” Multimedia Tools and Applications, 59 (2): 557. Chaney, P. 2009, The digital handshake: seven proven strategies to grow your business using social media. Hoboken, N.J: Wiley & Sons Chiang, I. and Chung-Hsien, H. 2011, “Exploring the impact of blog marketing on consumers.” Social Behavior and Personality, vol. 39, no. 9, pp. 1245. Collier, M. 2013, Think like a rock star: how to create social media and marketing strategies that turn customers into fans. New York: McGraw-Hill Education. DeMers, J. 2014, The Top 7 Social Media Marketing Trends That Will Dominate 2014. Accessed April 25, 2014 from http://www.forbes.com/sites/jaysondemers/2013/09/24/the-top-7-social-media- marketing-trends-that-will-dominate-2014/ ECSIP Consortium. 2013, Study on the competitiveness of the toy industry: Final Report. Rotterdam: ECSIP Consortium. Evans, L. 2010, Social media marketing: strategies for engaging in Facebook, Twitter & other social media, Indianapolis, Ind.: Que. Fox, S.C. 2009, E-riches 2.0.: next-generation marketing strategies for making millions online. New York: American Management Association. Keegan, W.J. and Green, M.C. 2005, Global marketing, Upper Saddle River, N.J: Pearson/Prentice Hall. Kerr, G. et al 2012, “Buy, boycott or blog.” European Journal of Marketing, 46, vol. 3, pp. 387- 405. Kim, E., Mattila, A., Baloglu, S. 2011, “Effects of gender and expertise on consumers motivation to read online hotel reviews” Cornell Hospitality Quarterly, vol. 52, no. 4, pp. 399-406. Kietzmann, J.H., and Canhoto, A. 2013, “Bittersweet! Understanding and Managing Electronic Word of Mouth.” Journal of Public Affairs, vol. 13, no. 2, pp. 146–159. Kincy, J. 2011, “Advertising and social media.” ABA Bank Marketing, vol. 43, no. 7, p. 40. Kotler, P. and Lee, N. 2008, Social marketing: influencing behaviors for good, Los Angeles: Sage Publications. Kwon, M-W, D’Angelo, Jonathan, and McLeod, Douglas M 2013, “Facebook Use and Social Capital: To Bond, To Bridge, or to Escape.” Bulletin of Science, Technology and Society, vol. 33, no. 1, pp. 35-43. Lacy, K. 2009. Twitter marketing for dummies. Hoboken, N.J.: Wiley. Mangold, W.G. and Faulds, D.J. 2009, “Social media: The new hybrid element of the promotion mix.” Business Horizons, vol. 52, pp. 357-365. Muntinga, D., Moorman, M. and Smith, E. 2011. “Introducing COBRAs exploring motivations for brand-related social media use”. International Journal of Advertising, vol. 30, no. 1, pp. 13–46. Ofcom 2012, Communications Market Report 2012. London: Ofcom. Accessed April 25, 2014 from http://stakeholders.ofcom.org.uk/binaries/research/cmr/cmr12/CMR_UK_2012.pdf. Ryan, D. and Jones, C. 2009, Understanding digital marketing: marketing strategies for engaging the digital generation, Philadelphia: Kogan Page. Perez, D. W., & Barkhurst, M. 2012, Toyland: the high-stakes game of the toy industry, Clifton Park, N.Y., Delmar, Cengage Learning. Porter, R. 2014,” China and the US at Odds in Online Games.” Entrepreneur, Accessed April 25, 2014 from http://blog.euromonitor.com/toys-and-games/. Safko, L. and Brake, D.L. 2009, The social media bible: tactics, tools, and strategies for business success, Hoboken, N.J.: John Wiley & Sons. Trattner, C., Kappe, F. 2013, “Social Stream Marketing on Facebook: A Case Study.” International Journal of Social and Humanistic Computing (IJSHC) vol. 2 (1/2). Webber, L. 2007, Marketing to the social web: how digital customer communities build your business. Hoboken, N.J: John Wiley & Sons Weissman, S. 2014, “Pinterest ‘Rich Pins’ Bring Riches to Retailers.” Digiday. Reflection My experience in this project has enabled me to learn a lot of things that I had never learned before. Although it was no walk in the park, I could develop some knowledge through the challenging experience. From the beginning of the project, I was prepared to develop my knowledge in every aspect of the project. This enabled me to develop a good plan from the onset, and then work on this plan. I obtained enough resources needed for me to complete the project. I then set myself psychologically for the paper. I then developed an outline of the project to guide me through the project. Handling this project gave me a chance to get firsthand experience in preparation for such a project in future. In the project, I followed my outline and researched key issues as the project progressed to develop new ideas and integrate into the ones I had developed when I was writing the outline. This enabled me to develop my learning as the project progressed. I managed my learning in such a way that I could gain enough concepts and lessons from the toy and games industry, and the contemporary theme of social media. From the project, I learned that it is possible to use Pinterest, Facebook and Twitter to market toys and games in order to attract customers, generate sales, and earn higher profits. I learnt about the concepts of eWOM, COBRA and Pin which are used in the three social networks. The challenge I faced was immensely in relation to obtaining information. It was difficult to get relevant information to complete the project. However, with a good dedication I was able to get enough information to complete my project successfully. I can say that I really performed excellently (though not perfectly of course) in the project despite all challenges. Read More