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Running head: BUSINESS PLAN-TOYS4CHILDREN

BUSINESS PLAN-TOYS4CHILDREN

Business Plan-Toys4children Executive Summary Toys4children will be a toy company which will specialize in offering a new category of children toys. Toys4children will launch a series of educational toys intended to provide both education and fun at the same time. The aim of this company is to achieve break-even before the end of first financial year. Similarly, profits are forecasted for the first couple of years. The product range offered by Toys4children will be divided into 3 categories. The first category of toys will aim to teach children the understanding of numbers. The second category will inculcate letter knowledge and third category will be responsible for imparting knowledge of different sounds. In addition to their educational value, they will not lose their fun attraction as it is essential for sales. Toys4children intends to achieve success on the basis of three foundations. Firstly, to continuously develop educational and entertaining toys. Secondly, it aims to develop business on strict financial regulation and lastly to take into account consumer feedback. Toys4children will be focusing on two customer segments. The first segment will consist of stand-alone customers such as parents, relatives buying toys for their children. The second segment will consist of institutions such as day-care centres and orphanages procuring products for themselves. This market segment is expected to grow annually at rate of 10% (Castelar Host, n.d.). The strategy of Toys4children will be to penetrate the market on the basis of its superior quality. The company forecast that it will record sales of $367,000 by the end of second financial year. The company aims to achieve this success on the potential of market and innovative product development.

Business Plan-Toys4children Product Description Toys4children will manufacture a new innovative range of products. These products will not only be enjoyable as far as their play is concerned but they will also impart educational knowledge. These toys will be focused to teach children three types of educational skills. Toys4childrens product range will be divided into following three categories. 1. Toy-digit The basic purpose of this toy is to give children basic knowledge of numerical. These toys will enable children to learn first 10 numbers ranging from 0-9 which are basis of mathematics. 2. Toy-Alpha Toy-Alpha as name suggests will deals with alphabets. This toy will allow children to learn English alphabets. 3. Toy-hubbub This category of toys will come with in-built speaker which will aim at making children cognizant of different sounds. In the first phase, Toys4children will launch these 3 categories of toys. However, with achievement of targets, company also intends to launch more new and innovative toys. Technology Description Toys4children will only be responsible for developing prototypes of each kind of product whereas manufacturing operations will be outsourced to third party. Prototypes will be developed in-house using electric circuit boards, moulded plastics, speakers, and L.E.D. lights. These prototypes will then be tested for commercial viability after which they will be outsourced for production on mass scale. Toys4children will not be using traditional methods of distribution instead it will conduct sales directly to customers through its website. This website will not be created in-house. Instead, it will be created through external web developers which will also host it. The website will be monitored for determining online traffic and later

Business Plan-Toys4children on that data will be used for forecasting sales. The site will be regularly updated to reflect new products and developments. Market and Competition Toys4children will not be targeting the regular toy market. Instead, it will be focusing on niche market of educational toys. Furthermore, this market can further be divided into two following segments: Stand-alone Consumers

This market segment consists of individual customers such as parents who usually make purchases for their children. Similarly, this segment also consists of other relatives such as grandparents, uncles and aunts who also buy toys for their grandchildren, nieces and nephews respectively. This segment will consist of all household which have income less than $50,000 on annual basis Institutional buyers

This market segment consists of all institutions who will buy these toys for their use. Examples include day-care centres, orphanages and children schools. Unlike individual customers, these institutions will procure the products in the bulk. Toys4children will be targeting both of these segments. Unlike other toys companies, Toys4children will not be making use of traditional channels. Instead, it will be selling directly to customer through its website. This will allow Toys4children to skim more profits as intermediaries present in traditional channel will be removed. In addition to this, it will allow Toys4children to develop relationship with its customers. Targeting these two segments will enable Toys4children to earn more profit, develop strong long-lasting relationship and provision of efficient service. Industry Analysis The toy industry mainly consists of those manufacturers which makes toys for the sole purpose of entertainment and fun. However, with passage of time, educational toys are also becoming popular. Overall, educational toys represent a small segment of whole toy industry. Due to its dual nature, this market segment has potential for growth.

Business Plan-Toys4children Competition The market of educational toys is dominated by two companies whereas there are many small companies which enjoy limited market share. The two main dominant players are Leap Frog and Knowledge Universe. The following figures show educational toys which are currently available in the market.

Adopted from: (Leap Frog, 2011)

Business Plan-Toys4children

Adopted from: (Leap Frog, 2011)

Adopted from: (Leap Frog, 2011)

Business Plan-Toys4children Business Model Toys4children will be selling educational toys through its website. These toys will not only be fun to play but will also be imparting education to children. Toys4children will be targeting the individual customer as well as institutional buyers. It will not make use of traditional channel of distribution but instead will be selling through its website. Objectives Toys4children aims to become profitable company within first year of its fiscal year. Toys4children aims to develop state-of-art, new and creative toys which are at the same time entertaining and educational. Business Strategy The business strategy of Toys4children will hinge on two distinct factors i.e. fun and education. Toys4children will produce toys which will not only contain entertainment factor but will also impart knowledge to young children. It will enable young children to increase their skill set such as their knowledge of numbers, alphabets and sounds. In addition to this, Toys4children will endeavour to build strong and long-lasting relationship with customers. Customer feedback will be given priority and will be taken into account in the process of new product development. This will enable Toys4children to gain competitive advantage over its rivals. The competitive advantage will be based on dual nature of toys as well as crafty engineering of the products. The products produced will be based on the preferences and needs of customers. Marketing Strategy The first phase of marketing strategy will be the formulation of marketing plan. The marketing plan will include all the details including the description of target market, promotion strategy, etc. Toys4children will market its product on the proposition that toys can also be educational. Promotions strategies will target parents in order to impress them with educational features of the toys. Parents will be inclined to buy those toys which will educate as well as entertain their children. The element of fun will keep children engaged. The marketing strategy will take into account the fact that

Business Plan-Toys4children Toys4children will target two different marketing segments. Therefore, different marketing strategies will be developed to cater to these segments. As far as promotional strategies are concerned, Toys4children will make use of magazine advertisement and mail marketing. Advertisement will be placed on those magazines which are mostly likely read by the parents. On the other hand, institutional market segment will be targeted through direct mail. This mail will feature product range offered by Toys4children along with its intended benefits. In addition to this, Toys4children will also employ its website for marketing its products. The content on the website will be optimized to increase its ranking in the search engines. Sales Strategy Sales will be primarily through Toys4children website. The orders will be placed by customers on the website which will be delivered within two weeks time. Promotion campaign will enable market segments to become aware of the companys products after which they will place their orders. The sales strategy will also be tailored according to the needs of each customer segment. Sales strategy targeting individual customers will be aimed to build customer loyalty which can eventually result in customer retention and repeat buying. On the other hand, sales strategy for institutional buyers will completely be tailored according to their preferences. Institutional buyers will be like wholesalers who will buy the companys products in bulk. Accordingly, they will be offered purchase discounts and offers. The whole sales strategy will be based on building long-lasting customer loyalty. It is forecasted that first three months of the operations will not witness any considerable sales. During this phase, Toys4children will be developing production and establishing sales channels. But at the end of the first year, Toys4children will be able to achieve break-even. Second and third financial year will witness considerable growth in companys revenues. Afterwards, company revenue will keep on growing but on sustainable levels. Toys4children will use its website as platform to conduct product distribution. It will be cost-effective medium for the provision of products as it will save organization much needed capital and human resource requirements. The website will be divided into two parts. One part will be providing general information regarding company and its products. Second part will be

Business Plan-Toys4children responsible for receiving orders. It will also contain information such as inventory, etc. Operations Strategy As far as the production is concerned, Toys4children will be outsourcing it to third party. This will provide organization with number of benefits which are as follows. It will free company for employing expertise relating to manufacturing. Outsourcing will enable company to keep overhead costs to prescribed limits. Fixed costs will be eliminated and all production costs will be variable costs. It will enable management to focus on core competencies in form of marketing and new product development. Manufacturing expense will completely be eliminated. There will be no financial risk as production will be in contractual form.

SWOT Analysis Strengths. Dual-nature of the product Potential of the market in form of growth Use of website to conduct sales Large reach as website can also take orders from overseas consumers Low production costs Interactive and innovative nature of products Low financial risk Two types of buyers Use of cost effective promotion strategy

Weaknesses. Limited experience of company in toy industry Lack of capital Overdependence on internet for sales Small market size of educational toys

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Business Plan-Toys4children Opportunities. Toys4children can enter the conventional toy market after establishing itself in the niche. Use of viral marketing to promote its products on the internet.

Threats. Competition from two market giants such as Leap Frog and Knowledge Universe. Low barriers of entry which may attract new competition in the market. Conclusion Toys4children will be entering the toys market with their new innovative range of products. These products will not only be fun to play but they will also impart education to children. Toys4children will target two market segments in form of stand-alone customers and institutional buyers. Company will be using its website to conduct sales whereas production and manufacturing operations will be outsourced. Toys4children aims to achieve breakeven in the first fiscal year with sustainable growth in revenues after that.

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Business Plan-Toys4children References Castelar Host. (n.d.). Market Information: China's Toys and Games. Retrieved May 27, 2011, from Castelar Host Web site: http://articles.castelarhost.com/china_toys_games_market_information.htm Leap Frog. (2011). New toddler learning toys. Retrieved May 27, 2011, from Leap Frog Web site: http://shop.leapfrog.com/leapfrog/jump/New/category/cat80048?q_facetTrail= 9004%3AlfToddlerToys&categoryNavIds=lfToddlerToys%3Acat80048&addFa cet=9004%3Acat80048