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MARKETING TOYS IN RUSSIA.
Term Paper ID:21454
Essay Subject:
Plan for selling Disney toy characters. Competition, demographics, promotion, forecast. Table of contents. Chart.... More...
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Paper Abstract:
Plan for selling Disney toy characters. Competition, demographics, promotion, forecast. Table of contents. Chart.
Paper Introduction:
Table of Contents
Introduction 2
The Product 2
Substitutions 3
Competition 4
Place 5
Promotion 7
Logistics 8
Environmental Factors 9
Pricing 10
Demographics 10
Pro Forma Operating Statement 10
Market Potential 10
Sales Forecast 10
Conclusion
Text of the Paper:
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These consumers may be attracted to the overall positive Disneyimage and thus may prove a strong target audience.Market Potential The market potential for toys as a whole is strong because parentswill purchase toys for their children even in the toughest of personaleconomic times. In Siberia and the easternportions of the country, there are few roads, and many of these areimpassable in winter. TheRussian Souls, estimated to be 25 percent of men and 3 percent of women,are passive and follow others, but also have a hopeful approach to theirlives. Initially, those characters with the mostpopular appeal will be offered, with additional entries being added aspromotional activities support. China shares a history similar to Russia in its communistbackground and its relative isolation from the West, and Disney has found afertile market for its merchandise there (Taylor, May 18, 1992, p. The first willbe to target the end users of the toys, the children. (1994). Flyers can be distributed directly to consumers and will featurepictures of the various characters and happy children. TheKuptsi represent 3 percent of men and 45 percent of all women, and arehighly nationalistic, seeking value for their purchases. Publishers Weekly, p. 22). One of the toys against which the Disney characters will compete isBarbie, a doll which is marketed by Mattel and which has proven popular inRussia (Randolph, July 15, 1992, p. Far Eastern Economic Review, p. Table of Contents Introduction 2 The Product 2 Substitutions 3 Competition 4 Place 5 Promotion 7 Logistics 8 Environmental Factors 9 Pricing 1 Demographics 1 Pro Forma Operating Statement 1 Market Potential 1 Sales Forecast 1 Conclusion 1 Introduction Russia, which represents the largest part of the former Soviet Union,offers a significant market to those manufacturers willing to take on thechallenge of marketing to the former communist population. Profit in selling English-language books in Asia. Moody's Company Data Report. Russia has the potential to become a significanteconomic power, and is likely to do so over the next ten to fifteen years.Its natural resources and well-educated population provide the necessaryingredients for the nation to become a strong capitalist market. However, the economic climate must be taken into account,and Russia does not yet have a strong economy. Petersburg is the second largest city with nearlyfive million inhabitants. D1). Onthe one hand, it seeks to embrace western-style democracy and capitalism,but at the same time, it seeks to maintain a national identity. This influx of capital isneeded to provide economic growth as the country struggles to replacecentralized bureaucracy with capitalism. London: Europa Publications.Krutick, J. In addition to Barbie, the Disney characters will also compete againsttraditional Russian toys and characters; these traditional toys can also beeasily substituted. The most direct andeasily identifiable is that of advertising, which will be discussed indetail. The competition from Russian toys offers a different type ofchallenge. D19). D1, D19.Europa Year Book 1993. However, there will also be direct appealsto parents in other publications. 24 1). One American advertising agency, D'Arcy Masius Benton & Bowles, hasidentified five types of Russian consumers: Kuptsi, Cossacks, Students,Business Executive, and Russian Souls (Elliott, April 1, 1992, p. The Walt Disney Company Report. In other partsof the world, the characters have unique qualities that differentiate themfrom other stuffed animals and dolls. Because of this, it is critical that a successfulpromotional program be put into place to support the development of strongpositioning for the Disney stuffed animals and characters.Competition The Disney characters will face competition from currently availableRussian toys as well as imported toys. These two publications will yield wide coverage and addressthose individuals directly responsible for the purchase of toy items.Logistics It is important to note that marketing efforts will initially focus onMoscow. Business Executives, estimated to comprise 25 percent of men and 1 percent of women, are characterized as ambitious, Western-oriented, busyand concerned with status. The railway system in Russia is of great importance in Russia owing tothe poor road system and relatively few private vehicles. A1, A14.Taylor, S. But while Barbie offerschildren a chance to play dress-up, the Disney characters are designed toprovide "best friends" through their cuddly presentation. A14). Vneshintorg is themost promising of the distributors identified at this point, and shouldprovide a strong ally in establishing a significant market share for thecompany's products. Within a few years, the company would like toopen a Disney store in Moscow offering a complete range of Disney items inaddition to the stuffed animals. While these are not generally considered promotional activitiessince they represent significant selling investments, they serve to promotethe sale of the figures made popular by the books and films. Consumer spending was light incomparison to other industrialized nations, and most Russians focused onnecessities rather than on comfort items. With the loosening of economicrestrictions and the move to a market economy, the Russian people now haveincreased choices regarding consumer goods, but they are also faced withhigh rates of inflation and less buying power than their counterparts inother countries (Elliott, April 1, 1992, p. Atwo-pronged approach will be used with regard to magazines. Tekhnointorg, also located in Moscow, also imports consumer goods aswell as machinery, communication products and foodstuffs. (July 15, 1992). However, there are significant obstacles which the nation mustovercome in order to achieve economic power, and those obstacles begin witha weak infrastructure and a lack of capital within the nation itself.Because of that, the nation is eager to attract foreign investment, andmanufacturing and selling Disney characters is one way in which that can beaccomplished. D1). Nizhny Novgorod (formerly Gorky), Novosibriskand Yekaterinburg (formerly Sverdiovsk) are other major population centers(Europa, 1993, p. 5). (January 28, 1994). Thisorganization has some experience with the larger stores that Disney hopesto build relationships with and could prove a strong partner inestablishing those relationships (Europa, 1993, p. These can be reissued with a Russian soundtrack inorder to bring the language in synchronization with the action. Disney has come to representAmerican encroachment in a variety of circumstances, and the company'sforays abroad have met with mixed results (Tokyo Disneyland does very well,for example, while EuroDisneyland has not been accepted as well) (Krutick,January 2, 1994, p. In addition to being the nation's largest city in terms ofpopulation and having a large foreign element since it is the capital(these are consumers who may welcome hallmarks of home), Moscow is also thecenter of the transportation system in Russia. (May 18, 1992). These are the prime target audience for thepromotional activities associated with the Disney characters because of thewestern orientation and the status associated with American products. Moscow isby far the nation's largest city, with a population of more than eightmillion as of 199 ; St. Television and radio advertising willfeature the same appeal, possibly using the same audio, and will be shortspots focusing on building awareness of the characters as well as theappeal of the toys themselves. The bulk of promotional activity for the stuffed animals will be basedon advertising, however, to be broken down as follows: television, 2 percent; flyers, 2 percent; magazines, 3 percent; and radio, 3 percent. However, thelarger cities are enjoying a greater concentration of stores that sell morethan one type of item. Because these particular figures already enjoy great success in otherparts of the world, manufacturing schedules can be increased in order tomeet the demand for Russia. 2412). The flyers will bebased on the creative efforts developed for the magazine advertising. 2416). 42. Veselye Kartinkiwill be a significant advertising medium. Initially, however, the company is moreinterested in establishing its presence in the toy market than in becomingan active participant in the retail market of Russia. Whiletoys are slightly out of the general experience of this company, theeconomy as a whole is young and working with Raznoeksport should prove agood opportunity for both parties. (April 1, 1992). The road networkis of greatest importance in European Russia. Mickey Mouse back in China. These toys are the various Disney characters made popular invarious Disney animated films. (1993). Today's Russia is in the midst of a collective identity crisis. 2417). These factors may result in a difficult time establishingmarket presence as the nation decides how much western influence it iswilling to adopt, and whether it is willing to embrace the uniquelyAmerican Disney products. Following thechanges that resulted in the breakup of the Soviet Union, there has been aremarkable opening of Russian markets to capitalism, and an invitation tointernational companies to conduct business. In late 1993, Disney returned to China marketingbooks as well as merchandise (the company left in 199 to protest weakprotection of copyrighted symbols, including Mickey Mouse) (Blass, November4, 1993, p. This relatively low figure reflects the need to develop marketawareness, the weak state of the economy in general, and the vagaries ofintroducing any new product. This is a long-term marketthat cannot be expected to yield strong returns initially. The New York Times, pp. ReferencesBlass, A. Television and radio advertising will be coordinated with the All-Russian State Television and Radio Broadcasting Company, located in Moscow.There are two main television channels: Ostankino, received throughout theformer Soviet Union; and Russian TV, a nationwide channel for the RussianFederation (Europa, 1993, p. Vneshintorg is another Moscow company that is the result of the mergerof two export/import companies in the early 199 s. For these reasons, initial marketing efforts willfocus on those cities which can be reached easily.Environmental Factors Until the early 199 s, Russia had a centrally planned economy andlittle official interaction with capitalism (although there was a healthyblack market for many consumer goods). Long-term plans for supporting theRussian market will call for additional facilities to be built, most likelyin Russia and most probably in the Moscow area. Barbie is a prime example ofimported toys that compete successfully in Russia, and against which theDisney characters will need to be positioned. Children'sbooks, such as those produced in many other languages, can also beimported. The Disneycharacters bring with them the trappings of the west, and of the UnitedStates, that on the one hand the country seeks, but which representsfurther erosion of the Russian identity on the other (Elliott, April 1,1992, p. There will be no design or set-up costassociated with the project because the facilities are already in place andable to produce additional units. The difference betweenthese two products is that while both can be categorized as dolls, Barbieis a representation of a human cast in hard plastic while the Disney dollsare representation of animals manufactured in plush and soft materials.Also, the Barbie figure is marketed with a large variety of accessorieswhich consumers add to over time while the Disney characters lack theseafter-market options. (November 4, 1993). As the products become better establishedwithin the market, sales should increase substantially.Pro Forma Operating Statement Gross sales: $15, , Less: Returns & Allowances: 1 , Net sales: $14,9 , LESS: Cost of sales $ 4,5 , Gross Margin $1 ,4 , LESS Expenses: Selling expenses Advertising $ 5, , Magazines $1, , TV $1,5 , Radio $1,5 , Flyers $1, , Promotion $ 25 , Total selling $ 5,25 , Administrative expense $ 5 , General expense $ 5 , Total expenses $ 6,25 , Net contribution from operations $ 4,15 , Conclusion Marketing Disney characters to the Russian market represents asignificant opportunity. In addition to advertising, however, there are other effectivepromotional efforts that the company can undertake to build a long-termmarket not only for the stuffed animals, but also for other Disneyofferings in the future. Barbie toys with Moscow's affection. It is targeted at the early gradeschool aged reader and is illustrated, supporting the use of stronggraphics in the advertising (Europa, 1993, pp. This research examines a possiblemarketing program for one such consumer product, Disney toy characters.The Product The product that will be sold in Russia is actually a collection ofplush toys. In order to bring Russianconsumers into the habit of purchasing Disney toys for their children, andin order to establish market presence, the toys can be priced at loweramounts relative to their cost elsewhere in the world. Magazine advertising will be critical to the success of the items. Advertising in the children's publications is designed to "pull" theproduct through the system by having the end consumer, the child, placepressure on the economic buyer. Children (and adults) associate thetoys with strong emotional feelings that are independent of the qualitiesof the toys themselves, but which are associated instead with the on-screenportrayals of the characters. 2414). Over ten years,the market should grow to over $1 million as additional characters andvarieties are introduced, and as the Russian economy improves to the pointthat it can support the consumer goods.Sales Forecast At an average price of five dollars per unit, it is estimated that thefirst year will realize revenue of $15 million (volume of three millionunits). New York: Moody's Investors Service, Inc.Elliott, S. 42).Place Russia is historically a country of small specialty shops rather thanthe large department stores that characterize other markets. While the Disney name and reputation is known throughout theworld, this is not always a positive factor. In addition to cementingrelations with the Russian authorities by providing needed jobs and capitalto the area, such a facility would decrease the logistical costs associatedwith transportation and importing goods into Russia.Substitutions Initially, the Disney characters will compete against other stuffedanimals and dolls. The result is thatalthough there is demand for consumer goods, including imported toys, thereis not necessarily the means among the populace to make the requisitepurchases.Pricing Because of this, pricing of the Disney characters will be a key factorin the long-term success of the products. Long-term, the relationship built with Vneshintorg maywell prove the most beneficial of the three.Promotion Promotion of these items takes several forms. Krestyanka (Peasant Woman) has acirculation of more than 2 million; published by the same company,Rabotnitsa (Working Woman) has a similar circulation figure (Europa, 1993,p. This company importsconsumer goods and raw materials as well as foodstuffs, but has shown aunique interest and success in joint venture operations as well as inwholesale and retail trade (Europa, 1993, p. 46.Disney (Walt) Co. With a circulationof more than nine million, Veselye Kartinki is the largest of thechildren's publications. S. Initially, the stuffed animals will be sold todistributors within Russia for eventual sale to the public through eithersmall or large operations. New York: Salomon Brothers, Inc.Randolph, E. As a market isbuilt for the characters and as the Russian economy as a whole improves,prices can be increased in order to realize greater benefit in the long-term.Demographics The Russian Federation has a population of more than 148 million as of1991, with more than half of these older than 15 years of age. A1). These promotional efforts include importingDisney films to Russia, especially the animated films which support theproduct offerings, and the videotapes which have become popular in otherparts of the world. There are promotional vehicles available which can be usedto support the marketing of these characters, and the additional marketingof other Disney products will also provide strong promotional support. Figuring out the Russian consumer. Murzilka is published monthly in Moscow and has acirculation of nearly three million. In order to make sure that the products receive the best possibleopportunity for success, the company will work closely with Russianorganizations that are familiar with the logistics and other factorscritical to successful implementation. Raznoeksport in Moscow exports andimports light industrial and consumer goods (Europa, 1993, p. This Moscow-based publication(whose title translates as "Merry Pictures") is targeted to pre-school andfirst grades and is humorous in its editorial approach. A child can usethe Disney characters as companions, but actively plays with the Barbie-type dolls (Randolph, July 15, 1992, p. Because the Disney characters do not have the uniqueproperties in Russia at this point that they have in other parts of theworld, they will be considered more of a commodity item than a unique toy,at least in the beginning stages of the marketing process. 46). The largestsingle segment of the population, these are not a good target for Disneygoods. In addition to being well-supported byanimated films that are available in videocassette in Russia already, thesefigures are animals and easily represented (and already manufactured) asstuffed animals. 2416). The Washington Post, pp. Disney characters have been successfully marketed in other parts ofthe world, however, including Europe and Japan, and have succeeded evenwhere other Disney ventures (such as EuroDisneyland) have not done as well(Disney, 1994, p. Disney competes against Barbie inother parts of the world, and does so successfully. Specifically, Mickey Mouse, Minnie Mouse,and Donald Duck will be offered. 24 8, 24 9).
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