Case Study on Toy Industry

Introduction:

Pramod Kumar (Pramod), CEO of the Tiny Toddlers Group was going through certain figures related to the sale of educational toys in the southern Indian state of Andhra Pradesh. Since its inception in 2001, the Tiny Toddlers Group had emerged as a strong regional player in the Toys segment in South India. The company faced competitive pressure from other major players such as Mattel¹, Lego² , Leo³, and Funskool⁴ that had a large market share and also produced and promoted educational toys that improved the learning of the children. Pramod decided to take a relook at his marketing strategies in order to improve his sales in relation to that of the other players. He had asked his staff to tabulate certain data pertaining to the sales of the company's  educational toys in Andhra Pradesh. He wanted to know what factors would help increase the sales of the toys. But he was now faced with a dilemma on how to go about analyzing the data.

The Tiny Toddlers Group was established by Pramod just after he completed his MBA. Pramod, who lived in a joint family in Hyderabad and had a liking for children, began by manufacturing small toys with the help of the disposable plastic and wood material lying around in his house. There were many families in the neighborhood which had kids and the children used to visit Pramod’s house nearly every day to buy the toys he made. Pramod not only sold his toys but also got to spend time with the kids, something he really enjoyed doing.

After completing his post-graduate degree in Business Management, Pramod thought of starting a small business manufacturing toys which would be both creative as well as educative. This was how the Tiny Toddlers Group, a private shop designing toys for young children, came into being in Hyderabad in the year 2001. The toys manufactured by his company also included educational toys. Within a short period, the company was able to produce toys that caught the children’s imagination. Within a span of 3 years, the Tiny Toddlers Group saw an increase in its sales and was able to increase sales and compete with major players

The company was well known for its high quality and immaculately designed toys for children of different age groups. Over the years, the Tiny Toddlers Group attracted a large number of customers who were satisfied with its products. It also established an online store in 2006 from where customers could purchase toys by linking to the company’s webpage. The company offered a discount on delivery and service charges to those customers who purchased toys in bulk. Participating in the toy exhibition in 2007, the Tiny Toddlers Group attracted the urban population as its products had many special features. The Tiny Toddlers Toys had heterogeneous features – in terms of sound effects, elements of fairy tales, fables, and sports that attracted the kids. The Tiny Toddlers Group ranked in the top 20 in terms of its sales and revenue compared with other toy companies that participated in the exhibition. Sales in Andhra Pradesh increased from Rs. 70,000 in 2001 to Rs.3.75 million in 2005.

The toy industry in India, which is as old as the nation itself, had been fostered and enriched by a rich and intellectual technology background

Considering toys as an educational tool for the children, the Tiny Toddlers Group emphasized designing educational toys and these were more in demand among parents from 2005. Around that time, an old friend and classmate of Pramod, Ram Kumar (Ram), who was a teacher at the Comic Garden School and taught Lower Kindergarten kids, visited him

At the outset, many of the toys attracted the children and sales were brisk. The Tiny Toddlers Group thus managed to break even within a short span of 2 years. However, Pramod observed that the sales of the toys were not stable and wanted to find out the reasons for this. With the competition intensifying in the market, Pramod wanted to get the marketing strategies for his company right.

Question:

1-       What were the factors that led to unstable sales of toys.

2-       What marketing strategies “ Tiny Toddlers Group” must use to stablise the sales.