Strategic Group Analysis of Toy and Gaming Industry

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The toy and gaming manufacturing industry can be divided into two main categories: electronic and non-electronic toy manufacturers. Electronic manufacturers produce video games for consoles and online platforms, with major players including Nintendo, Microsoft, and Sony as well as third-party manufacturers like Valve Corp and Activision. Non-electronic toy manufacturers target young children with action figures, dolls, board games, and puzzles. Mattel Inc is the largest toy manufacturer, followed by Jakks Pacific Inc and Hasbro Inc. Hasbro has strategically moved overseas to boost international sales and was recognized as one of the top 100 companies to work for in 2011-2013 by Fortune Magazine. Pricing strategy and product diversification are key factors for success in this market due to the constantly changing toy preferences of children.

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Strategic Group Analysis of Toy and Game Manufacturing Companies The toy and gaming manufacturing industry can be broadly categorized into two groups. The first is game manufacturers for electronic devices in which producers design and program video games targeted to older children and young adults. The two strategic groups that exist are video game manufacturers for game console systems and manufacturers for online video games. In today’s market, the three major game console systems are Nintendo Wii, Microsoft’s Xbox 360, and Sony’s PlayStation 3.

A major third party that these companies outsource to is Valve Corp. , the manufacturer and software designer for video games such as Tomb Raider, Resident Evil, and Star Wars. They have enjoyed a reputation of being one of the most highly respected entertainment game manufacturers because of their award winning software design and innovative distribution platforms. Their biggest competitor is Activision, a world-wide developer, publisher, and distributor of interactive gaming software for both computer and console games.

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Since the company was founded in 1979, they have merged with Vivendi Games and became a major competitor for all corporate giants in the computer and game console entertainment industry. In addition to being the creator of Call of Duty and Guitar Hero, they own the rights to all world famous computer games developed by Blizzard Entertainment, including World of Warcraft, StarCraft, and Diablo. The second category for game and toy manufacturers are non-electronic toy manufacturers whose target market are young children ages 12 and under.

The strategic groups for this particular industry are action figures and dolls, as well as board game and puzzle manufacturers. Since children are accustomed to changing toys often, the main focus is their pricing strategy and product diversification. Mattel Inc. is world’s largest toy manufacturing company and the dominant competitor for all toy manufacturing organizations. Annual revenue of $6. 8 billion was earned in 2011 through their major sales of Barbie, American Girls, Hot Wheels, and Fisher Price products, according to CNNMoney. com.

Following close is Jakks Pacific Inc. , the third largest toy manufacturer worldwide. Another corporate giant in this industry is Hasbro Inc. , a board game company that manufactures its products in East Asia. Due to the economic decline in the U. S. , Hasbro strategically moved overseas to increase international sales by taking U. S. failed toys and selling them for more than triple the original price. They have earned an annual revenue of $4. 2 billion in 2011 and was recognized as one of the top 100 companies to work for in 2011-2013 by Fortune Magazine (CNNMoney. com, 2013).

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