This paper attempts to provide a comprehensive insight into Toys R Us. It analyzes its marketing strategies with a respect to its past performance, current scenario and an outlook of the future.
It assesses the company’s standing amongst its competitors using SWOT, PEST and competitive forces frameworks. It discusses the detailed market analysis of the organization and suggests measures to improve strategy. It also points out past mistakes committed by the company and how it can rectify those problems. It attempts to scrutinize the macro and micro environments of the company.
Detailed observations with respect to competitors are included in the paper and an analysis of changing customer dynamics has been discussed. An attempt has been made to display the interrelationships of all the factors effecting marketing strategy and planning. The customer segments, target market of the firm and future customer trends or environmental opportunities have been tapped into. A holistic approach towards applying marketing concepts has been used to discuss all the components of the paper.
VisionVision is the impossible dream of an organization (Kotler & Keller, 2008). The corporate vision lays the foundations for its mission, objectives and future strategy. Toys R Us defines its vision statement as follows“Put joy in kids’ hearts and a smile on parents’ faces” (vuw.ac, 2003).
It can be established from this vision statement that Toys R Us aspires to win over every child and parent in its operating markets. Toys R Us set its standards high by setting such an impossible dream as its vision statement as it is hard to satisfy every single customer in the market place.Mission StatementA Mission Statement sets the overall direction or broad strategic objectives of an organization and is shared with employees, stake holders and customers. It sets the roadmap for an organization and guides its purpose.
The mission statement of Toys R Us is as follows“We believe our business is built one customer at a time, and we are committed to making each and every customer happy. Our goal is to be the “Worldwide Authority on Kids, Families and Fun” (vuw.ac, 2003).Kotler & Keller identify succinctness, meaningfulness and memorableness as three attributes in a good mission statement (2008).
Toys R Us’ mission displays these three characteristics in it. It also shows the corporation’s aim to position itself in the minds of its customers. It shows the corporation’s commitment towards valuing its customer-base and its efforts to become an authority on fun filled experiences for children and parents through its product offerings. Market AnalysisThe market analysis of Toys R Us reveals that there is a potential to sell toys and related children products in the United States.
Even though US Census carried out in 2005 stated that children through ages five to thirteen decreased (US Census Bureau, 2005). However, there still remain many households with children that form prospective customers for Toys R Us. The growth rate of overall population is expected to increase and so is an increase in the growth of prospects of Toys R Us. “US personal consumption expenditures for toys, dolls, and games are forecast to grow at an annual compounded rate of 4 percent between 2008 and 2013” (toy & hobby stores industry forecast; hoover.
com, 2008). However, profitability in the toy industry is dwindling because of intense competition posed to Toys R Us by its competitors such as Wal-Mart. The competition is growing on price sensitivity and Toys R Us cannot charge higher margins as it would impact its sales in the highly competitive industry. Overall profitability of a firm such as Toys R Us depends largely on how well it attracts store traffic and merchandises effectively.
The market profitability can be analyzed through Porter’s competitive forces model. These are five forces, namely, rivalry among existing firms, threat of new entrants, threat of substitute products, bargaining power of suppliers, and bargaining power of buyers. Rivalry amongst competing firms is intense and Toys R Us is facing cut throat competition from Wal-Mart, Target and GameStop. Its competitors are competing on pricing in this industry that is characterized for its price sensitivity.
Wal-Mart because of its efficient business processes and influence on suppliers is the established price leader and this has allowed it to become the market leader in the industry as well. Threat of new entrants is low because the industry already has intense competition and developing low cost business for a new startup considering lack of experience and undeveloped value chain would be an uphill task. Threat of substitute products is low because toys and video games do not really have substitutes that can satisfy needs or wants of children. Bargaining power of suppliers is low because Toys R Us is a huge retailer and has power in its value chain as a toy retailer.
Similarly its competitors such as Wal-Mart and Target too have influence over suppliers. Therefore, bargaining power of suppliers in the overall industry is low. Bargaining power of buyers is high because Toys R Us competes in a price sensitive industry any competing firm that provides low priced products and leverages on lower margins can snatch Toys R Us’ market share away from it. Wal-Mart has an established cost advantage over its competitors in the industry and Toys R Us has been trying to compete with it but has acknowledged that it cannot compete with its biggest competitor on cost basis.
Toys R Us is using a click and mortar business model to distribute its products. Toys R Us was late to develop its online retailing system through toysrus.com. Initially, it allied with Amazon.
com to host its website but that alliance was a dismal failure because Toys R Us complained that Amazon was subletting its services to other cheaper unbranded toy stores that were competing with it on the internet retail market. It was after a considerable time that Toys R Us actually developed its independent platform for a virtual store front allowing customers to shop online through toysrus.com. If it would have developed this newer channel initially it would have added to its competitive advantage.
Toys R Us has finally struck a deal in developing its online distribution channel as it has purchased etoys.com and related websites. (News Release; Toys R Us, 2009). The current chief executive officer Jerry Storch is positive about this acquisition and says the following:eToys.
com is a highly respected brand with a rich heritage of innovation and growth, and we look forward to championing the next phase of its evolution. We believe the acquisition of eToys.com, together with BabyUniverse.com and ePregnancy.
com will advance our leadership in the toy and baby products sectors and position the company for strong market share growth. We are committed to providing loyal customers of these sites with an enhanced online experience, while continuing to offer a differentiated merchandise assortment and the service excellence they have come to expect. (News Release; Toys R Us, 2009).The changing dynamics of market trends are analyzed using the PEST analysis.
The political environment of Toys R Us is sound with ongoing political stability. However, any changes in government’s taxation policies will impact the organization’s profitability indirectly. The economic environment is changing considerably as the United States economy is undergoing recession. Sales of a toy retailing store such as Toys R Us is directly related to consumer spending and the discretionary income of population.
Under the current circumstances the consumption in the economy is expected to be low. This is also going to impact the already price sensitive customers in the industry to become more price oriented. Opportunity lies in addressing this emerging need of lower priced toys that can appeal to the changing needs of customers. The social environment of Toys R Us is undergoing change, wherein the customer age groups remain of segments below five years and the five to twelve year kids segment is decreasing.
Their customers are not being replaced by similar number of children. In Addition, there is an increase in pressure on children’s leisure time with mothers encouraging educational activities over leisure. Similarly, the technological environment is also not expected to undergo any major change that would impact Toys R Us. Due to the changing market environment Toys R Us needs to update its core competencies it was previously focusing on marketing a shopping experience to its young customers and their parents alike.
However, now it needs to tap into the price conscious attitude of the customers and provide value for their money. It should develop a core competency offering a good product assortment, quality of service and that too at a highly competitive lower price. It should develop alliances or partnerships with its suppliers to accomplish these objectives and carving this core competency that can ensure its survival in the market. Furthermore, it should eye the emerging international growth markets particularly in Asia with high disposable income and a greater population segment of children.
Competitors of Toys R Us in the marketHoovers determines Wal-Mart, Target Corporation and GameStop as three competitors Toys R Us should be wary of. Wal-Mart the retailing giant that swept the retail industry and changed all preceding industry dynamics needs no introduction. It is the world’s top retailer with over seven thousand eight hundred stores of which eight-ninety are discount stores, and two thousand and ninety-seven combination stores. It has about six hundred warehouses and has international presence.
Approximately fifty percent of its stores are located in the United States and it is yet undergoing expansion on the international level to markets such as Asia, England and South America. Wal-Mart is the top retailer in Mexico and Canada. It is also operational in Asia and owns a 95% stake in Japanese retailer. (Company overview; Hoovers, 2009).
Toys R Us’ second fierce competitor is the retail chain that ranks number two after Wal-Mart that is Target Corporation. It stocks items that are low priced and offer high perceived value. It operates around one thousand six hundred and eighty SuperTarget and Target stores across the United States. It also has an online presence through Target.
It engages in niche strategy, whereby, it has established itself as a retail store offering product mix that is trendy, stylish and fashion oriented. Whereas its competing firms such as Kmart and Wal-Mart do not have such offerings. Target owns Associated Merchandising Corporation, which is an apparel supplier. It issues Target Card and Target Visa as well.
(Company overview; Hoovers, 2009).The third important emerging competitor for Toys R Us is GameStop, which is an established leader in gaming industry. The line extension of Toys R Us i.e.
Games R Us faces stiff competition by the established leader that is GameStop. GameStop sits atop the video game retailing industry. GameStop is holds approximately six thousand two hundred stores in over fifteen countries. Its market coverage makes it the largest retailer of new and used games.
Its other product offerings include hardware, entertainment software, and accessories. Most of its stores are located in the United States, Canada, Australia, and Europe. Its major source of revenue is the new and used video games product line. On average a GameStop store carries one thousand new titles and three thousand five hundred used ones.
GameStop also has an online presence through GameStop.com and ebgames.com. Apart from operating in e-commerce GameStop also publishes a video game magazine (Game Informer).
Its magazine Game Informer has more than three and half million subscribers. It underwent growth through acquisition by buying out a competitor Electronics Boutique in 2005. This doubled the size of GameStop and its capabilities to meet market demands and trends effectively.Targeted market and whyToys R Us has targeted children for its products, which are undoubtedly toys.
However, it is actually targeting the parents of children falling in the age groups of under five years old, and five to twelve years old. These children cannot purchase for themselves it is their parents who fulfill their wants. In addition, Toys R Us targets mothers of babies and children through campaigns revolving around child safety and protection that tap the emotional appeal of mothers. Positioning itself in this way it benefits from the image it creates.
Toys R Us is aware of the price sensitivity (because of price wars with giant retailers) of its customers. Its toys are fairly priced and more over it seeks to attract more store traffic through visually stimulating store layout, décor and a toy land experience for the children and their parents alike. Toys R Us has selected this target market as it directly matches with its product offerings and product line extensions.GrowthThe company has been trying to leverage its capabilities to effectively counter the challenges in its environment.
The history of the company reveals that it has been acquiring businesses to add to its portfolio or has been venturing into newer segments where it saw potential to increase profitability. Its venture of opening up Kids R Us stores, then growth into international markets tapping Japan, Singapore, Canada and United Kingdom. It also ventured into Babies R Us chain of stores. Signed a deal with Amazon to manage its virtual storefront i.
e. toysrus.com. Acquired Imaginarium and has recently acquired etoys.
com and related websites in February 2009. This shows that the company has been conscious of changing market trends. However, it has not been very effective in cashing in on opportunities or combating the threats the external environment proposed to it. For instance, its Kids R Us stores closed down after dismal financial results.
It faced considerable losses in Japan and failed to achieve market or mind share there. Its deal with Amazon collapsed in wake of disgruntled stakeholders and lost revenue against online competition virtual toy stores. Nonetheless, its Babies R Us venture has been very successful since its inception and Imaginarium has added to its revenue lines too. It remains to be seen how its acquisition of etoys.
com affects its business. On the surface level it seems to be a good way of adding an already developed online store to its portfolio and combine it with toysrus.com for better competitive advantage. Although it is too early to comment if this would bring prosperity or dismay to the organization.
Toys R Us should focus on the high growth market of games and consoles. It should devise plans to establish a competitive advantage in this product line.Market SegmentationToys R Us has divided the market of its prospects into different segments. It had identified a kids segment and opened up Kids R Us stores in the United States.
However, it failed to fulfill the needs of this segment. Another segment it identified was the babies segment to offer baby apparel to and it opened Babies R Us. Babies R Us has been a success because it rightly identified the need of the segment and provided the right set of products to fulfill those needs. Toys R Us has further segmented on the basis of its product line that is its game and console offering.
It has established Games R Us to cater to the needs of those customers. Games R Us is trying to catch a hold of its target market and it is too early to comment on its success or failure as yet. Furthermore, as revealed by the Toys R Us chief executive officer that they purchased e-pregnancy.com this indicates that they might just have identified another segment to market to.
This segment could be the expecting mothers and it might try to offer products related to this segment.Competitors AnalysisA SWOT analysis framework is used to gauge the competitive environment of the industry. SWOT stands for Strengths, Weaknesses, Opportunities and Threats respectively. An organization needs to set the right mix of resource to capability matching to combat environmental changes.
Therefore, strengths of Toys R Us lay the potential for opportunities and its weaknesses would pave the way for threats. The strengths of Toys R Us include its established brand name, a well established distribution network with advanced logistical system, market coverage with over 1500 stores, a diversified product range and a superior product assortment. Its weaknesses include an unfocused marketing strategy that keeps shifting its message from cost to experience and the other way around. Its over-dependence on the last quarter of the year (Christmas and holiday season) also qualifies as a weakness.
The sales in the last quarter make or break its financial year round performance. Opportunities in the market environment exist if the firm can cash its internationally renowned brand name to lucrative markets that promise good returns. Develop special product lines offering toy range that is not available elsewhere and base this range through customer analysis and market trends. Cash in on the changes in customer preferences towards games and consoles.
This is a high growth market towards which Toys R Us should focus. Toys R Us biggest threat to its toys line comes from its retailing competitors Wal-Mart and Target. Whereas GameStop gives its gaming line a stiff competition because it specializes in offering games and consoles. Its traditional product line of toys is a low growth market and has reached saturation levels.
The child population is decreasing as discussed earlier in the report.Wal-Mart is the market leader in the toy industry because of its efficient business processes, and bargaining power over its suppliers it is able to offer toys with the lowest price tags. Its cost leadership is the main factor behind its success in this industry. On the other hand, Target the number two retail merchandizing chain takes advantage of its image as a trendy stockiest carrying the most wanted and must have toys of the season that will not be carried by its competitors.
Whereas, GameStop that sells both used and new games is an established leader in the video gaming industry and threatens Toys R Us’ initiative to develop its Games R Us in the high growth market of gaming. UBS Christmas 2008 Survey carried out in December, 2008 byAccording to America’s Research Group revealed that over the course of the weekend in which the survey was conducted. Sixty six percent people shopped at Wal-Mart and this figure was more than the sum of percentage figures of Sears (19.6 percent), Target (17.
9 percent) and Toys R Us (12.1 percent). Furthermore, most of the shopping was dispersed in the product lines that are being offered by Toys R Us. These were Toys (33.
8 percent), Children’s Clothes (23.7 percent), Electronics (23.7 percent), Video Games (18.9 percent) and Gift Cards (12.
4 percent). (Wal-Mart dominates Christmas Shopping, 2008). This shows the stiff competition faced by Toys R Us because all of the big retailers offer toys and similar products. They all try to cash in the Christmas season that is also crucial to the earnings of Toys R Us.
In fact Toys R Us makes the most sales in the last quarter or Christmas season. This competitive landscape further emphasizes the need to create a dependable revenue line that is profitable all year round or the need to encourage year round purchases amongst Toys R Us’ customers.Marketing VenuesToys R Us uses an integrated marketing communications approach towards marketing its image, toys and sister concerns. It not only advertises its products and company image but also reinforces it with its retail store atmosphere, public relation activities and more.
For instance, it advertises a fun filled toy at a fun filled location that is a Toys R Us store. Though it does not stop there when a customer comes to buy the toy to the retail store, the store layout, décor and fun filled environment reinforces the original message communicated. Furthermore, the company adds to its image and communicated value by engaging in community friendly seminars for autism, fund raising for underprivileged children and more. It carries out these activities in-store, out-store or even online at its website as required to suit its purpose of marketing communications.
Furthermore, it disseminates the same values to its employees and trains them in accordance to their marketed set of beliefs. ProfitsThe current net sales of Toys R Us as given in its News Release for year ending January, 2009 stood at US dollars thirteen thousand seven hundred and twenty four. These were approximately 0.5 percent lower than the sales of 2008 (thirteen thousand seven hundred and ninety four).
Cost of sales and operating costs remained fairly consistent over the two year period. The overall net earnings improved by approximately forty-two and a half percent. (News Release; toysrus.com, 2009).
However, Net sales figure is the main representative of the firm’s marketing and management efforts to generate revenue from core business activities. As compared to Toys R Us, Wal-Mart’s net sales were $405,607 million for financial year 2009 declined from $378,799 million. Wal-Mart’s revenue posted a gain of 7 percent. Target’s net sales stood at $64,948 million as compared to $63,367 million from previous year.
Target posted a year on year increase in net sales of a meager 2.5 percent. GameStop’s net sales were $8,805 million for financial year 2009 up from $ 7094 million in financial year 2008. GameStop’s net sales figures register an increase of impressive 24 percent over the periods 2008 to 2009.
It can be seen that from the results that under the competitive environment of the industry and the economic factors specializing in a particular segment or product line appears to be a must have capability as it has delivered results for GameStop.SWOT Analysis of Marketing StrategyStrengthsToys R Us has been able to establish a smart brand recall through its marketing communications. It has acquired mind share of prospects and customers alike. The words toy brings a connected image of a Toys R Us store to most people’s minds.
Toys R Us has also established itself as an ethical organization involved in adhering to standards of corporate social responsibility. Through holding campaigns to ensure child safety, supporting autism and other causes for children too. The appointment of Gerald L. Storch as the new chief executive officer is also a strength of the marketing strategy.
Since he was formerly Vice Chairman of Target Corporation and knows the business proceedings of the competitor and can help Toys R Us develop capabilities to combat the onslaught from discount retailers.WeaknessesToys R Us has not been able to position itself as a price leader or a value provider in the industry due to its mixed set of marketing promotions. It should focus on one aspect on business either go after the experience retailing or target low cost differentiation strategy in its marketing communications. Its growth strategy is not a very feasible option under the prevailing environmental factors it should focus on a particular high growth niche and develop a competitive advantage in it.
. It responds to the changes in marketing environment though most of its initiatives as a response to the marketing environment have been dismal. Its marketing has had a selling attitude, which should be changed towards what brings it long term profitability.OpportunitiesToys R Us has developed brand equity and it can use this brand equity to launch a new product line where it can cash its brand strength.
For instance, it can focus on a mothers segment and launch a Mother’s R Us store or to test market the idea first introduce products to cater to the needs of a pregnant mother to be and market through its recently acquired e-pregnancy.com. ThreatsThe threats branch out of the weaknesses in marketing strategy of Toys R Us. Since it has not been able to differentiate itself as a low cost provider or a value provider it has not been able to win over either of the two.
Over the years, Toys R Us has given mixed communications with regards to its rationale of providing value in terms of cost and also in terms of creating a memorable experience. This leads to a customer dissonance, who might be motivated to buy a competitor’s product offering because it communicates a single value such as price or experience that the customer values most.StrategiesGavetti and Rivkin believe that “the heart of a company’s strategy what it chooses to do and not to do. The quality of the thinking that goes into such choices is a key driver of the quality and success of a company’s strategy”.
(Gavetti & Rivkin, 2005).Competitive StrategyIf we discuss Toys R Us in relation to its competitors we can spot Wal-Mart as the market leader with forty percent and above of market share in toy industry. Target Corporation can be identified as a market challenger that closely mimics Wal-Mart’s pricing strategy to attract customers and adds to it the perceived benefit of trendiness that Target projects about itself. Toys R Us appears to be the market follower that is trying to cling on to its current market share and content in withholding customer attrition.
GameStop can be spotted as a market nicher that serves a sub-segment of the industry i.e. gaming. Furthermore, Toys R Us also appears to be following the imitator role of a market follower, wherein, it follows the lead of Wal-Mart such as lower pricing but maintains its differentiation of packaging, promotions, products and distribution channels.
Toys R Us is lacking a core competency, one that truly differentiates it among its peers. Provided that under the recessionary trends, or other skill deficiencies faced by the organization it should focus on pricing strategy for survival. If it does not do so the discount retailers would kick it out of the market.Marketing StrategyToys R Us is pursuing a growth strategy where in it is identifying newer market segments or eyeing resources that it can acquire to add to its capability to deal with the dynamic marketing environment.
It is also a move to strike the balance of resource and capability for future endeavors of the company. Its acquisition of three new websites makes this stance very clear. It also shows that Toys R Us is sensitive towards the needs of the customer and acknowledges customer’s wants to shop online and the opportunity e-commerce presents to them. They seem to have learned from their past mistake of not entering the e-tailing segment and then reluctantly entering it when it was too late to form a competence out of the internet distribution channel.
Toys R Us is marketing its image of corporate social responsibility through organizing in-house seminars and campaign to combat autism or raise funds. As well as describing its initiative to give back to the community through its website. It has an entire webpage dedicated to communicate its corporate philanthropy to its customers. It has a self managed ‘Toys R Us Children Fund’, and alliances with ‘Save the Children’, ‘Safe Kids Worldwide’, ‘Autism Speaks’, ‘Marine toys for tots foundation’, ‘Kids in distressed situations’, ‘Children Affected by Aids foundation’, ‘Support for differently abled kids’ and The Toys R Us Children’s Fund-Starlight Site Playroom Program.
It has adapted to the go green culture gaining strength in the United States as it introduced ecologically friendly toys in March 2008 last year. Toys R Us is using online marketing effectively and harnessing it to work to its benefits. It organizes many events and activities to involve parents and children for social causes. This is in essence a form of event marketing being followed by Toys R Us.
Furthermore, it is engaging in relationship marketing by forming a relationship with the parent of the children through its seminars and functions of engaging them into the Toys R Us community. Toys R Us is also engaged in experience marketing as the former CEO John Eyler wanted the customers to have fun while shopping at Toys R Us and he is the one who instigated the concept of not just selling toys but an experience to the children and their parents. This concept is still a part of Toys R Us and the Toys R Us store at Time Square New York is a prime example of this concept.It was astute of the board of directors of Toys R Us to hire Gerald L.
Storch the former vice chairman of Target as the new chief executive. His appointment as the CEO shows the marketing strategy of the board itself that they are committed to take down their competition through superior skill set and game plans. Furthermore, Toys R Us has become sensitive towards the needs of its customers and is now offering toys under the brand name of Toys R Us that are cheaply priced with minimum profit margins as will be discussed under pricing strategy.The company should focus towards differentiating itself from the other discount retailers by communicating additional benefits with no extra costs or some edge that the discount retailers ca not compete with.
For instance, exclusive product line that is available at Toys R Us stores only and offering more selective toys that are in agreement with contemporary children wants. Its marketing strategy should help strengthen its ‘R Us’ brands equity and communicate good quality. An isolated approach to marketing strategy formulation will not help. Toys R Us will have to come up with an impressive integrated marketing communications mix that is based on the holistic marketing concept.
Kotler ; Keller define the holistic marketing concept as “a concept based on the development, design, and implementation of marketing programs, processes and activities that recognizes their breadth and interdependencies”(2008).Pricing StrategyToys R Us has been using a penetration pricing strategy in its business. “Penetration pricing strategy is a relatively low market entry price with the objective of building volume, and market position” (Cravens ; Piercy, 2003). Toys R Us started off as a category-killer where in it applied a disintermediation of intermediary layers by removing wholesalers and agents from the supply chain.
It got into direct contact with suppliers and functioned as a retailer catering directly to the end customer. However, as the industry evolved over the years it is now facing a similar problem against the retail tsunami that Wal-Mart is and its peer Target Corporation. Whereby, Toys R Us viability to remain in the market is highly related to its pricing techniques. Craven and Piercy state that “when price is an important factor for a large segment of buyers, a low active price strategy is very effective” (2003).
This is exactly the pricing model that Toys R Us has been following. Toys R Us has long been a follower of low-active pricing strategy under the market penetration pricing model. Its choice of pricing has been largely dictated by the high price sensitivity of the customers in its industry. Since the bargaining power of customers in the toy industry is high Toys R Us could not have succeeded if it charged higher profit margins.
This strategy is by design vulnerable to competition as it encourages competitors to offer comparable prices. Cravens and Piercy further explain that this strategy is not suitable for fierce competition and only works when a company has cost advantages and strong positioning within the industry (2003). This strategy was working for Toys R Us until Wal-Mart came around the corner as well as other discount retailers. It would have been better for the company if it had followed a medium price and backed it up by Superior Promotion, Superior Distribution, Superior Quality and Superior Service.
This way it could have justified a bit higher profit margin.Furthermore, in an industry characterized by low prices it is imperative for a firm to form loyal customers that would prefer it over the competitors. Toys R Us should encourage customer loyalty programs to keep its customers and encourage store visits, and recurrent purchases through reward points and other promotions. This is exactly what it has done, Toys R Us is now offering customer loyalty program marketing to customers that it makes the shopping experience more rewarding.
It initiated this program in October last year prior to the holiday season of year 2008. It offered incentives of greater value and savings for frequent purchasers and named the loyalty program Rewards R Us. Offering services to members such as Exclusive Member Shopping Nights and Exclusive Savings and E-mail Discount Offers.The current economic recession in the United States has diminished the discretionary income of the masses.
Toys R Us has responded to this by recently introducing $1, $2 and $3 shops in stores nationwide. The news release dated April 2nd, 2009 highlights this initiative on part of the company to “offer more ways for kids and families to have affordable fun”. This initiative has generated positive feedback and praise from pricing gurus. Professional pricing society blog-post reviews it as:Toys R Us is implementing a new (and I think very intelligent) pricing strategy that will both increase the company’s competitiveness against “dollar stores” and other low cost merchandisers, but that will also tap into a new (and loyal) market – kids.
Through this pricing strategy Toys R Us will be able to compete with low priced toys at dollar stores because the customers had switched to lower priced outlets. Moreover it will help Toys R Us to gain the loyalty of kids that are the true segment they want to attract and retain. Furthermore Toys R Us is going to keep changing its merchandize offering at its stores with a set of hundred items made available at one time. Therefore, keeping the excitement factor for kids and making encouraging collectibles through this offering.
ConclusionToys R Us has enjoyed success as a pioneer in toys segment in the United States. However, it had lost its competitive advantage because of cut throat competition from discount retailers. To regain its competitive advantage it needs to develop its core competency and for that it needs to allocate the right set of resources to identify the resources at hand and the resources that it needs to develop. Determining the gap will help Toys R Us to identify, build and sustain its developed capability.
Moreover the contemporary business environment is characterized by change. Toys R Us needs to be market oriented as well as customer oriented to adapt to changes or better be proactive about the changing world of work. It needs to differentiate itself amongst its competitors and communicate the value it offers to its customers. Otherwise it will be an uphill task for Toys R Us to compete in the market and survive in the market.
It needs to find sub-segments in the market or niches and cater to those product niches rather than competing head on with Wal-Mart or Target Corporation. It needs to diversify into international markets and scan the environment for upcoming marketing opportunities that it can serve and plan strategies in a proactive rather than a reactive manner. ReferencesCensus Bureau. Estimates Number of Children and Adults in the States and Puerto Rico AdultsIn the States and Puerto Rico Retrieved April 20th, 2009.
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