03 Jan Hasbro Inc.: Marketing Plan for New Service
Hasbro Inc.: Marketing Plan for New Service
Hasbro is one of the largest toy and games manufacturers in the world. Over the past three decades the toy and games industry has experienced increased competition which has necessitated the industry players to diversify their products in order to survive the cut-throat competition and stay relevant (Betz, 2014). Hasbro has been on the forefront in diversification, both vertical and horizontal. Rapid diversification has enabled Hasbro to shrug off competition from other toy manufacturers and increase its market share in the US market. Currently, it is the second largest toy manufacturer in the US after Mattel in terms of revenues and number of employees (Naylor, 2014). Hasbro has, for instance, produced many internationally recognized brands such as G. I. Joe, the Transformers and many Marvel toys. It is also renowned for its board games like Monopoly and Scrabble and a host of video games too. Of late, Hasbro has been producing films, adding it to its ever widening portfolio. The films are both live action and animated. In line with the diversification policies, Hasbro has decided to include service provision in its portfolio. The services will involve setting up game rental kiosks for rental services and party planning services. This paper investigates then proposes a viable marketing plan for the new services the enterprise plans to introduce. The paper conducts a SWOT analysis of the company, compares it against its present and future competitors, explores the service programs to be rolled out and, lastly, explicates the marketing mix plan.
Hasbro SWOT Analysis
This analysis provides Hasbro’s strengths, weaknesses, opportunities and threats. This information is important to managers as it informs the decision making process.
Hasbro’s major strength that has enabled it to increase its market share exponentially is its diverse product range. It sells products ranging from emotion pets designed for young children, games suited for teenagers and even adult board games (Mbaskool.com, 2014). A diverse range of products is, especially, essential in this dynamic industry as products can easily be rendered obsolete. The second strength is that it has an excellent presence in the international market (Naylor, 2014). Its products are major hits in America, Europe and Asia where they are manufactured. Hasbro has been struggling to get the majority stake in the American market where Mattel has been a fierce rival. Hasbro decided to, instead, cut out a niche for itself in the international market and the strategic move is paying off. Thirdly, Hasbro also has an excellent brand portfolio (Hasbro.com). Through mergers and acquisitions, Hasbro has many subsidiaries that are specializing in production of certain toys and games that add an aura of uniqueness to Hasbro’s products. Hasbro also has exclusivity in some world renowned toys. With blockbuster movies such as Star Wars, MASK and G. I. Joe still selling there is no telling when the market for Hasbro’s toys will stop expanding. Lastly, its employees are some of the most efficient in the world. Researchers have established that Hasbro’s employees have some of the highest revenue per employee in the world at US $701 million. Mattel’s employees have revenue per employee of US $201 million which is considerably low when compared to Hasbro’s (Betz, 2014).
Hasbro has been manufacturing most of its toys and games in the Asian countries. For years there have been allegations that the factories are not conducive for working and that its employees in the factories are not adequately remunerated (Mbaskool.com, 2014). They are only paid slightly above the minimum wage. This damages its good brand image. Secondly, even though the company has a wide collection of products that it sells, it still relies on others’ distribution networks. It should set up its own distribution channels to save on operating costs in the long run. Another weakness is that, in America, Hasbro play second fiddle to Mattel. Mattel has 40% toy market share whereas Hasbro has 32% (Naylor, 2014). Lastly, there is a high customer concentration on very few of its products, which is not healthy for the company. A diverse customer base is apt.
There is an opportunity for the company to develop into a one stop merchandise shop as time goes by. Customers will be able to find all they want in one shop. It can also create franchises through its toys just like it has done with Star Wars and G. I. Joe among many others (Betz, 2014). That way it will increase its presence both locally and globally. Also, with the growing video game and application market, Hasbro has an opportunity to expand its portfolio even further and double its profitability by leveraging those games’ licensing (Naylor, 2014).
Its major threat is cheaper imitations which are diverging its revenues elsewhere especially in the Chinese market. The advent of electronic alternatives is also threatening to reduce its customers’ base and revenues (Hasbro.com, 2014). Its reliance on the Chinese manufacturers is also a threat since the control over the factors of production is relinquished. There are also many substitute products in the industry thus making profitability highly volatile, a situation that is exacerbated by the fact that toy sales are highly seasonal (Mbaskool.com, 2014).
Hasbro’s current competitor is Mattel. It has been a fierce rival for decades. It produces toy brands such as Barbie dolls, WWE toys and video games systems. Mattel has outshone Hasbro in the American Market but has not been able to replicate the same on the international front (Naylor, 2014). One of the main advantages Mattel has over Hasbro is that it manufactures products that the majority of American boys and girls of all ages identify with. This has helped it penetrate the home market more than its competition. Secondly, Mattel is manufacturing its products in the US, unlike Hasbro that outsources its manufacturing needs from Chinese manufacturers and only maintains two manufacturing plants outside Asia (Betz, 2014).
Mattel is also a market leader in toys and games manufacturing. It produces its products in more than 150 countries, has strong brand equity just like Hasbro’s which is complemented by a strong supply chain. Some of its weakness that gives Hasbro an edge includes weak management team and production of toxic toys. The management is trying to address these issues. It is also faced with cheap labor utilization in its factories situated in the third world countries (Betz, 2014). Its scale of opportunities is one of the factors that gives it an edge over Hasbro as it has extensively internationalize its operations and is continuously enjoying economies of scale. Mattel’s mode of operation is traditional, just like Hasbro’s. Departmental stores stock the company’s products.
Hasbro’s future competitor is Redbox because it offers services that Hasbro is considering to offer. The company specializes in selling and renting of DVD and Blu-ray discs (Redbox.com, 2014). It is, essentially, a service organization since the rental services are provided via automated retail kiosks. By the year ending 2012, Redbox had over 42,000 kiosks located in 34,000 different places (Redbox.com, 2014). These locations include restaurants, pharmacies, supermarkets, fast food stalls and many other locations. Hasbro wants to include rental services in its portfolio. Redbox will be the main rival as it is already commanding 47.8% of the market share (Redbox.com, 2014). By 2010, Redbox had already rented over one billion games and movies. It will be a tall order for Hasbro to match these statistics. However, given that Hasbro is already established in the toys and movies industry its learning curve is bound to be steeper than Redbox’s. In a few years time after the launching of the rental and party providing services, Hasbro will be Redbox’s serious competitor.
Services differ from products in that they are intangible, they do not have a physical presence and subsist for a short period of time. Services are an integral part of the global economy and contribute more than 85% of the world’s revenues (Gremler, Bitner and Zeithaml, 2012). Therefore, apart from the diversification objective of the company, it also wants to maximize its revenues by tapping into the services market. Hasbro intends to roll out two services under its service program; Game rental kiosk and Hasbro Party Planner. Under Game rental kiosk, Hasbro intends to set up automated la Carte game and toy rental kiosks. These kiosks will be set up at strategic places where there is immense people traffic and will also enable quick and easy borrowing and returning processes. In the game rental kiosks, the customers will be able to access game applications, game rules, and play ideas and games mediator in a one-stop shop setting.
Hasbro also intends to offer party planning services. The Hasbro Party Planner shall offer themed party ideas and actual throwing of the party. It will also provide a la Carte Options to create your Own. This service allows a customer to custom-make his or her own theme to fit his or her wants. Lastly, the service will also include a party vehicle for rent.
How the Services fit with the company’s goals
One of the main goals of the company is to achieve a 15% revenue growth in each subsequent year (Hasbro.com, 2014). Given that services have dominated the US market and, to a significant extent, the world economy, it was the best bet to achieve this goal. Another goal is to grow the game category by 10%. Providing games and movies in kiosks that are situated near the customers will also grow the goal of growing Hasbro’s franchises and those of its key partners such as The Walt Disney Company, Marvel and Lucas Film (Hasbro.com, 2014). Lastly, the party planner service will help create unique brand experience for its customers, which is one of the company’s goals. The Hasbro branded kiosks provide a unique feel that the customers can identify with. The game rental kiosk and the party planning are in sync with the Sustainability Goals 2020. These goals include doubling the revenues and size of the company and continued offering of philanthropic services (Hasbro.com, 2014).
Why Embrace the Change?
The customers are bound to embrace the new service programs to be offered. One of the main reasons the prospective customers will embrace them is that it gives them greater flexibility. For instance, the party planning service allows for custom-made service provision apart from the set varieties on offer. The full party service is offered at respectable prices. Also, iconic toys and games like G. I. Joe and Transformers should be on offer. The kiosks will also be conveniently placed near the customers. They will be located in the local retail shops, supermarkets, restaurants and other utility facilities where customers have ready access to (Kaleka, 2011). The services, thus, come to the customers. Furthermore, the kiosks offer the services throughout the day. Most importantly, the kiosks allow for game trial especially for the wide range of video games on offer.
Marketing Mix Plan
A marketing mix plan simply refers to the set of actions employed by an organization to promote a brand in a market (Donnelly, 1976; Gremler, Bitner and Zeithaml, 2012). The traditional marketing plan is explained using the 4P model consisting of price, product, place, and promotion. The four factors, as illustrated in Figure 1, interact to influence the target customers’ decisions. They are designed to create a suitable environment that encourages the target customers to utilize the products or services on offer. However, marketing scholars have been able to expand these factors past the four basic factors to seven (Suri, Paul and Garg, 2013). The other three include people, physical evidence and process.
This is the value allocated to the services provided by the company (Gremler, Bitner and Zeithaml, 2012). Hasbro shall utilize different pricing strategies to market its services. The customers will utilize the services at subsidized prices in the first instance. Those who are loyal customers will also be able to access the services at reduced prices alongside accumulating redeemable points through the reward system (Skalen, 2009). The price will also be differentiated according to regions across the US. Those regions with more customers will access the services at premium prices while the regions with fewer customers but with a significant prospective market will access the services at competitive prices to woo the target audience (Suri, Paul and Garg, 2013). This is a traditional price marketing strategy that has been tested and proven as effective for a long time………
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