UK toys and games industry
Case analysis
I. Macro environment
Any changes in macro environment will inevitably influence on the company. PESTLE is a framework to estimate external forces (see Table 1)
Table 1. PESTLE analysis
Factor Current situation Implications
Political/
Legal/
Environmental 1) Restrictions in marketing to children 1) ethical and legal aspects should be taken in marketing to children; damage to company reputation in case of offence
Economical 1) Recovery after recession and economic downturn
2) GDP growth
3) Industry trading deficit increased by 40% 1) rising costs and falling prices, currency rate volatility etc.
2) disposable income growth
3) price competition may take place
Social 1) Less spending on toys and more confectionary, video game and consoles, children magazines
2) Children birth rate growth
3) Children sophistication and savvy 1) development of new markets/segments
2) market potential growth
3) educational or interactive toy products
Technical 1) Easy Internet access and high Internet penetration 1) types and channels of communication with customers are shifting to digital ones
External environment both complicates and provides new growth opportunities for Hornby company. Economical and social forces define customer’s behavior. Digital presence and social media marketing (SMM) are a must nowadays.
II. Competitive environment
The majority of issues may outcome from the industry.
To summarize market environment it is better to use Porter’s Five Forces Model.
Potential entrants (low access):
• Barriers to enter the toys and games market are relatively low. Therefore, if local competitors appear they are likely to take a niche segments; the more threat should be expected from overseas markets when competitors take a decision to enter the UK market or increase import volume to the UK (like Mattel or Hasbro, US owned companies operating in the UK).
• In terms of distribution channels Internet clears up
I. Macro environment
Any changes in macro environment will inevitably influence on the company. PESTLE is a framework to estimate external forces (see Table 1)
Table 1. PESTLE analysis
Factor Current situation Implications
Political/
Legal/
Environmental 1) Restrictions in marketing to children 1) ethical and legal aspects should be taken in marketing to children; damage to company reputation in case of offence
Economical 1) Recovery after recession and economic downturn
2) GDP growth
3) Industry trading deficit increased by 40% 1) rising costs and falling prices, currency rate volatility etc.
2) disposable income growth
3) price competition may take place
Social 1) Less spending on toys and more confectionary, video game and consoles, children magazines
2) Children birth rate growth
3) Children sophistication and savvy 1) development of new markets/segments
2) market potential growth
3) educational or interactive toy products
Technical 1) Easy Internet access and high Internet penetration 1) types and channels of communication with customers are shifting to digital ones
External environment both complicates and provides new growth opportunities for Hornby company. Economical and social forces define customer’s behavior. Digital presence and social media marketing (SMM) are a must nowadays.
II. Competitive environment
The majority of issues may outcome from the industry.
To summarize market environment it is better to use Porter’s Five Forces Model.
Potential entrants (low access):
• Barriers to enter the toys and games market are relatively low. Therefore, if local competitors appear they are likely to take a niche segments; the more threat should be expected from overseas markets when competitors take a decision to enter the UK market or increase import volume to the UK (like Mattel or Hasbro, US owned companies operating in the UK).
• In terms of distribution channels Internet clears up