Group 6: Marketing PlanPart I – The Consumer and Market Profile MGCR 352, Section 006 Professor: Sameer Mathur Shan Chun Chak (David): 260321705 Laura Galin: 260315116 Sophia Herbst: 260353577 Stephanie Taras: 260302965 Rebecca Varon: 260425752 Aminata Wurie: 260299751 Monday November 1st 2010
Section 1: Our Product and its introduction into a new market Build-A-Bear Workshop, Inc. is a company based out of St. Louis, Missouri, thatwas founded in 1997 by Maxine Clark. It is the only global company that specializes inoffering children an interactive experience in creating their own customized plush teddybear. The company operates 21 stores in Canada and more than 400 stores worldwide(Build-A-Bear Workshop). Build-A-Bear Workshop offers fun, unique, and customized products. When abear is created, the child goes through a number of steps – “choose me, hear me, stuff me,stitch me, fluff me (grooming), dress me, name me, and take me home.” These steps arenot just steps; they are an experience, making our product comparable to dolls. Pricesrange from $12-$30CDN for the bears, with the clothes and accessories at an additionalcost. Also, a free online service called CyBEAR Space is offered, which allows the childto create an online world for its bears (Build-A-Bear Workshop). We hope to capitalize on the currently stable Brazilian economy by franchising inSao Paulo, Brazil’s largest and wealthiest metropolitan city (PricewaterhouseCoopers).The Brazilian toy and games market is expanding due to the increase in demand for thesekinds of products. The reason for this is mainly the share of imported goods, which hasincreased almost five-fold within five years. Imports are responsible for 63% of the toyssold in Brazil, but national production has remained at a constant level for some years(World of Toys: Home). This growing demand illustrates that introducing Build-A-Bear Workshop in SaoPaulo will satisfy customer needs and wants. Additionally, plush and active toysencompass approximately one third of the toy market in Brazil (Industry Profile -Toys &
Games in Brazil, 11). Changing fashion and technological trends, cartoons, toys, andadvent of corporate advertising in the gaming world are some of the major factors thatinfluence the children’s toy and game choices. Introducing our product into the Brazilian market goes along with Build-A-BearWorkshop’s strategy to expand via franchising. We aim to bring the teddy bear to life foras many children as possible, all over the world. It is important that our products possessand incorporate an extensive understanding of the Brazilian culture. In order to effectively establish our product in the Brazilian market, our primarygoal is to provide appropriate staff for in-store demonstrations, advertise and promotethrough television and street-side ads and launch on October 12th. October 12th isNational Children’s Day, one of the most important dates for the Brazilian toy trade. Thisdate and Christmas generate 70% of the total annual sales (World of Toys: Home).Section 2: Consumer Profile We aim to appeal to children ages 5-14, who make up about 25% of the Brazilianpopulation, and is a relatively undeveloped niche in the market (Euromonitor,“Consumer”). Kids have become increasingly influential in family purchasing habits, andnow influence 82% of overall purchasing decisions (Euromonitor, “Consumer”). Wetherefore plan to capitalize on this advantage by advertizing to both boys and girls in theSao Paulo area, who ultimately control a large portion of their parents’ purchases in thetoy realm. Also, in Sao Paulo, out of the 43% of mothers who bring their children ages 2-14 to supermarkets, 61% of the children ask for specific products, and 32% ask forspecific brands (Euromonitor, “Consumer”). Our secondary market is the working family of all income levels with fewer
children, particularly focusing on dual-income, middle and upper class families. Wewould also like to target baby-boomer grandparents in retirement who wish to buy ourproduct as gifts for their grandchildren. Although game consoles do present a threat toour market, when grandparents go searching for toys for their children they “purchasetoys and games based on the iconic image of their youths” (Euromonitor, “Global”). Aschildren grow older, it becomes increasingly difficult for grandparents to purchase toysdue to the generation gap; therefore, Build-a-Bear is ideal for them. The annualdisposable income in Brazil has risen dramatically in recent years (Euromonitor,“Global”), and the average household size has shrunk to about three to four people in2007, compared to the five person family in 1995 (Euromonitor, “Global”). Fewerchildren per family, and a higher household income results in a higher spending averageper child. The bears are priced to be affordable for all income levels, and the uniqueoption of buying additional accessories appeals to all income groups as a viable gift andtoy. It is also important to note the growing trend of married, working mothers, who aredelaying marriage and childbearing until they have established a career at about 26 yearsold, resulting in the working woman’s ability to spend more money on her children(Euromonitor, “Consumer”). Dual income families often compensate for being “absentparents” by purchasing toys; and all parents look for durable toys that are well-priced andstimulates their children’s imaginations (Euromonitor, “Consumer”). Build-a-Bearencompasses all of the said qualities, while offering quality parent-child time. The Sao Paulo metropolitan area is ideal for our company; it has an estimated19,889,559 people in 2009 ("Estimated…"). It was named the 10th richest city in 2008,and currently the Brazilian economy is relatively stable, being the 9th largest in the world
(“Economy Watch”). Typically, households in urban areas have higher incomes thanthose in suburban or rural areas, therefore, Sao Paolo is perfect as our first stop inpenetrating the Brazilian market. All of these facts can be summarized as follows: Our typical consumer would be adual income, middle to upper class families in the greater Sao Paulo metropolitan area,with 1 or 2 kids, and possibly having a close relationship with one of their grandparents. Section 3: Market ProfileSituation/ Market Analysis: As previously stated, Brazil is one of the world’s fastest growing economies. In2009, Brazil’s total population was 194,578,500 (Brazil - Country Profile). Our targetmarket, children under 14, comprised 26% of the Brazilian population as of 2009 (Brazil– Country Profile). Therefore, the total size of our primary market is 50, 590, 410. Within the Americas, the United States and Canada represent 85.2% of the toys &games market (Industry Profile –Toys & Games in Brazil, 12). Among the remaining14.2%, Brazil accounts for 6% (Industry Profile –Toys & Games in Brazil, 12). Thismakes Brazil the largest consumer of toys & games throughout central and SouthAmerica. This makes Brazil the perfect place for our launch. In 2009, the Brazil Toys and Games market had revenues of $1779.7 million.This is projected to reach $3251.2 million by the year 2014, representing a growth of82.7% (Industry Profile –Toys & Games in Brazil, 2). However, intense competitionserves as a barrier to entry for independent toy stores, as discussed in the followingsection (Industry Profile –Toys & Games in Brazil, 2). Activity toys represent the largest segment of the toys and games market inBrazil, with a 20.5% share of the market (Industry Profile –Toys & Games in Brazil, 11).
Dolls represent the second largest chunk (17.3%) and plush toys represent 8.9% (IndustryProfile –Toys & Games in Brazil, 11). The Build-A-Bear product and its experience is acombination of these 3 sectors. This is extremely important because the activity toys,dolls and plush toys segments together represent 46.7% of the total toys and Gamesmarket in Brazil. This huge potential market, along with forecasted market growthprovides support for our launch of Build-A-Bear in Brazil. One trend in the market that will potentially contribute to our success is thewealth of the grandparents of the baby-boomer generation. They are “more able to spoiltheir grandchildren” (Industry Profile –Toys & Games in Brazil, 13). As well, demand fornew toys is always high, due to short-lived popularity inherent in toys (Industry Profile –Toys & Games in Brazil, 13). Build-A-Bear offers thousands of different accessories,which will hopefully extend the life of the product. Lastly, the growing economy andrates of consumption in Brazil have seen a corresponding rise in wealth among a majorityof the population (Industry Profile –Toys & Games in Brazil, 14). Due to the increase inaffluence, “Demand for […] toys […] has increased and the choice of domestic andforeign toys […] is plentiful” (Industry Profile –Toys & Games in Brazil, 14).Competitor Analysis: The competitive field in the Brazilian toy market is very fragmented. There aremultiple manufacturers producing toys in various sub-sectors. These range from thetraditional plush toys we plan on introducing to class dolls, board games, puzzles andmuch more. In 2008, Mattel was the clear market leader. There are many other reputablemanufacturers, but none represent the market power of Mattel. Mattel is an internationalmanufacturer that, in 2008, had an estimated market share of 30.5% (Appendix). As
Table 1a shows, there are many flaws in Mattel that will be advantageous to the launch ofBuild-A-Bear in Brazil. Piracy and product recalls weaken Mattels market share andnegatively affect the brand image. This is beneficial to us as we will be seen as a viablealternative. Despite this, Mattels undeniable market size and brand loyalty are asignificant threat. Multibrink will represent the second most serious threat to Build-A-Bear. This isbecause it focuses on the same market segment as our product, dolls and soft/plush toys(Multibrink, Toys and Game – Brazil). It also incorporates the use of licensed childrensproducts in order to attract young consumers. This is a threat to us as we plan on doingsomething similar with our customization options. Furthermore, Multibrink positionsitself as a manufacturer of low priced items which are distributed using various channels.The ease in purchasing this established product will deter interest in visiting our location. Indirect competition also exists in the market. This includes toy companies suchas Estrela and Grow as well as video gaming companies. Leading manufacturers havebeen increasingly investing in the Brazilian market (Traditional Toys and Games –Brazil). For more information on all competition, please refer to Table 1a and 1b in theAppendix.
Bibliography:Build-A-Bear Workshop-Canada: Home Page. Web. Oct. 2010. <http://www.buildabear.ca/>.Toy Industry Association. (Feb 15, 2010). 2010 Toy Trends Get Straight “As” at 107th American International Toy Fair. Earth Times. Retrieved Sept. 26, 2010 from earthtimes.org/articles/press.Industry Profile – Toys & Games in Brazil. DATAMONITOR. June 2010. Retrievedfrom Marketline Database.PricewaterhouseCoopers. "SP Sera 6a Cidade Mais Rica Do Mundo Ate 2025, DizRanking." O Estado De S. Paulo - Notícias, Vídeos, Fotos Do Brasil E Do Mundo,OnlineE Celular. 9 Nov. 2009. Web. 29 Oct. 2010.<http://www.estadao.com.br/noticias/geral,sp-sera-6-cidade-mais-rica-do-mundo-ate-2025-diz-ranking,463359,0.htm>.World of Toys: Home. Rep. Web. 29 Oct. 2010. <http://www.world-of-toys.org/south-america/toy-market/?L=1>.Brazil – Country Profile. Euromonitor International. July 2010. Retrieved fromGlobal Market Information Database.Grow Jogos e Brinquedos SA - Toys and Games – Brazil, CompetitivePositioning. 30 Nov 2009. EUROMONITOR. Retrieved from Global MarketInformation Database.Gulliver Manufatura de Brinquedos SA - Toys and Games – Brazil, CompanyBackground and Competitive Positioning. 30 Nov 2009. EUROMONITOR.Retrieved from Global Market Information Database.Industry Profile –Toys & Games in Brazil. DATAMONITOR. June 2010. Retrievedfrom Marketline Database.Manufatura de Brinquedos Estrela SA - Toys and Games – Brazil, Productionand Competitive Positioning. 30 Nov 2009. EUROMONITOR. Retrieved fromGlobal Market Information Database.
Multibrink Brindes e Brinquedos Ltda - Toys and Games – Brazil, StrategicDirection Competitive Positioning. 30 Nov 2009. EUROMONITOR. Retrievedfrom Global Market Information Database.Traditional Toys and Games – Brazil, Competitive Landscape. 30 Nov 2009. EUROMONITOR. Retrieved from Global Market Information Database."Brazil Market." Economy Watch(2007): n. pag. Web. 29 Oct 2010. <http://www.economywatch.com/market/world-markets/brazil-market.html>. "Estimated population of municipalities in Brazil on 2008-07-01." Estimativas das Populações Residentes. Instituto Brasileiro de Geografia e Estatística, 2008. Web. <http://en.wikipedia.org/wiki/S%C3%A3o_Paulo>. Euromonitor. Consumer Lifestyles – Brazil (2009). Global Market Information database, McGill University 28 October, 2010. ---,Toy and Games: How Demographics and Income Shape Demand. Global Market Information database, McGill University 28 October, 2010.
Table 1a – Main Direct CompetitorsManufacturer Information Market Share (2008)Mattel - an international manufacturer 30.50% - operates in many sub-sectors which include “dolls, action figures, model vehicles, games and puzzles, and infant and pre-school toys” - manufactures famous brands such as Barbie, Hot Wheels, and Fischer-Price - faces constant problems with piracy as well as recall problems with individual product lines (OPPORTUNITY = negatively affects the brand image of Mattel)Multibrink - focuses on the same market segment as our product, dolls and top 10 soft/plush toys (THREAT) - incorporates the use of licensed childrens products in order to attract young consumers (THREAT) - positions itself as a manufacturer of low priced items which are distributed using vary channels - Super/hypermarkets account for nearly 20% of its sales, where it faces little competition. - also uses department stores and wholesalers, accounting for 21% and 25% of sales respectivelyGulliver - focuses on the niche market of action figures and dolls 2.10% - has been experiencing a decline in market share since 2004 - planned to launch 13 new toys in 2009 which would stimulate a 10% growth in their market share. - focuses on selling toys with “slightly smaller unit prices than its competitors” - sales are heavily concentrated to the South-eastern region of Brazil, particularly in São Paulo (THREAT, this is where we plan to launch)Information retrieved from Global Market Information Database, Toys and Games– Brazil, EUROMONITOR. Compiled for this report.
Table 1b – Main Indirect CompetitorsManufacturer Information Market Share (2008)Estrela - did not face product recalls 3.60% - restructured its operations and opened new factories in Itapira (São Paulo) - has a range of products targeting the middle and lower income classes - a large portion of Estrelas focus is on classic dolls, which it markets to higher- income consumers (OPPORTUNITY = can gain from the established market here if higher income consumers also desire our product)Grow - primary focus is on the market of puzzles 3.20% and board games - Board games account for approximately 50% of company sales. - targets both children and adults - strong in the infant and pre-school sub- sectorsVideo Games - many children move out of our market into this one - largely different product at a much higher price pointInformation retrieved from Global Market Information Database, Toys and Games– Brazil, EUROMONITOR. Compiled for this report.Table 2 = Market Share of Competition in Brazilian Toy Sector% retail value rsp 2004 2005 2006 2007 2008Mattel do Brasil Ltda 9.5 10.2 35.1 31.4 30.5Candide Indústria e Comércio Ltda 4.9 5.3 5.9 6.1 5.9Manufatura de Brinquedos Estrela 6.0 3.9 3.8 3.8 3.6SAGrow Jogos e Brinquedos SA 3.7 3.1 4.3 3 3.2Gulliver SA 4.0 3.8 3.6 2.2 2.1