NOVABRINK MARKET

EXPANSION REPORT
Team 430
Member residence/home country Roles in Project
name & email
Karim Ajouz USA/USA Editor, Market Entry Mode, Message, Trade
kajouz@stetson.edu Regulations, Report Formatting

Patrick USA/Germany Team Coordinator, New Market Selection,

Zengerling pzengerling@sandiego.edu Distribution Channels, Pricing Strategy

Hanne-Lore Estonia/Estonia Market and Competition Analysis, Promotion

Vain hannelore.vain@gmail.com Channels, Logistics

Javier Russi Colombia/Colombia Promotional Material, Certifications, Research

Lince russilincej@gmail.com Support

Bachkad Russia/Morocco PESTEL Analysis, Research Support

Oualid bachkadoualid1@gmail.com
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EXECUTIVE SUMMARY

Novabrink is a top 8 toy manufacturing company, based in Brazil, their factory is

based in Lauro de Freitas. The core idea of the business is to make children happy.
Novabrink’s target audience is 3-8 year-old kids, the actual clients, however, are mostly
parents.

To achieve the goal of happy children they have some “top” products for kids, for
example bigger and taller than usual dolls, and also “my size dolls” which are human sized
dolls. Their most popular products are Miraculous Ladybug, Disney princesses and Frozen II.

It has been seen that Novabrink is already successful in Brazil. For an expansion it has
been decided to choose Germany as a new market for Novabrink. Germany is a favorable
country to expand based on market research.

In the toy manufacturing industry there is a great competition, as it is common in this

market that the clients do not care about the toy manufacturing company’s name or brand
because they only care about the character itself. All the toy manufacturing companies are
always competing for the licences for the movies to get the contract for the character.

For their expansion we chose 3 different ecommerce platforms in Germany, as it was

the most effective and low risk option when considering different costs. The toys’ distribution
will be performed in a convenient way, and considering the current situation in the world, it
will also be as reliable as possible through e.g. Amazon FBA.

In order to reach out to as many people as possible there were several ways we chose
for Novabrink to consider. We concluded that YouTube would be the most cost effective
platform through which we can use ads and different influencers to reach out to Novabrink’s
potential customers via e.g. review videos. Other options were memorable ads outdoors or on
our chosen e-commerce platform. As the main target is children, then it is important to
impress them, and if they are impressed, then they will be those who will influence their
parents. Additional promotion channel will be a subscription based email marketing. By that
the customers will always be informed what new arrivals the store will have.

It is understandable that moving from a non EU country to an EU could be considered

difficult, but based on the research, it can be said that it will not be costlier than opening up a
new store. The prices of the toys will not have a major change, the initial price of the toy will
be kept, only a few units will add up because of the shipping.

I. The Product: Market and Competition Analysis

1. Industry and Competition Analysis

● Novabrink has a very competitive position to expand to other companies with its
current success in Brazil and its low production costs
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● We found out that Germany would be the most attractive market to enter
● Our chosen market entry strategy is through direct sales through i.a. amazon.com

As we know, Novabrink wants to expand to a larger market, which means that it will
have to “share” the market with their new competitors. Currently the top 10 most successful
toy manufacturers are LEGO, Bandai Namco, Hasbro and Mattel.
For instance in 2019, Bandai Namco was leading in the toy manufacturing industry with a
revenue of 6.6 billion US dollars. LEGO was at that time the second largest with more than
5.78 billion US dollars in revenue.

(Statista, 2021)

We believe that Novabrink has the potential of being in the top 20 list of global toy
manufacturers, when it will expand to global markets. To better understand what they will be
facing when it comes to competition, we can take LEGO as an example, since they are the
leading toy manufacturer in the world right now. LEGO has a very strong global brand. They
say that children are their role models, their mission is to inspire the builders of tomorrow
and their vision is to be a global force for Learning-Through-Play.
Furthermore, LEGO has 3 different brand promises. The first promise for the users of the
products is “play promise”, which is created by joy of building and pride creation. The
second promise is the “people's promise”, which means succeeding together, and the third
promise is the “partner promise”, which creates mutual values with their partners. The spirit
of LEGO is “Only the best is good enough” (“The LEGO Brand”, n.d.).

From the market analysis we conducted, we identified that currently the toy industry
is moving towards more educational purposes for toys. In today's world, technological
development is very fast and even more opportunities are discovered, so technology has also
slowly been entering the toy industry. To provide an example, manufacturers have started to
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produce toys from different video games, and push towards more electronic toys like
different robots, small electric cars, helicopters, any kinds of automated toys and much more.
One specific product example that illustrates the movement towards more digital toys is a
new toy called Tonies from a German toy manufacturing company called Boxine. Tonies are
a shape of box toys kids can play with. It helps them to use their imagination and to practice
different storytelling. The founders of Tonies wanted to make their children happy by
bringing together the digital world, storytelling and creativity (“Simply Meant to Be”, n.d.).

PROS AND CONS OF THE COMPETITION

In the following section we have examined the competitive positioning of Novabrink.

Some competitive advantages that we have identified are that Novabrink has a very clear
vision of their products and their company.

As Novabrink is the top 8 toy manufacturer in Brazil, then they are already in a very
good position, so they have a good base from which to improve on.
In addition, they have been considered as a creative company and there is always a
competition between different manufacturers who will get the global contract for any
character release, for which product creativity is essential. That means that Novabrink can
use this strength and propose creative product ideas that will be sold, and loved by children.
Labor costs in Brazil are also very low, which is a beneficial factor for Novabrink.
The average wage of a factory worker in Brazil is $1.65 per hour (“Average Salary in Brazil”,
n.d.).
Since the customer base comprises parents and kids, it would be easy to enter a new
market without prior brand awareness as those customers do not make a purchasing decision
based on the manufacturing company’s brand, but mainly based on the character, the quality,
and the product idea for the toys.
On the other hand, there are also some disadvantages Novabrink is facing. As mentioned
previously, they have very strong competitors with well-known brands and a global
reputation. In addition to that, Novabrink does not necessarily have anything unique to offer
in terms of its product portfolio which will differentiate them from their competitors.
As the toy industry is a shark tank of competitors, Novabrink in a sense of who gets to
manufacture a certain toy idea for e.g. a Marvel movie, the existing relationships between
companies like Walt Disney and big toy manufacturers can also be considered as a
disadvantage of Novabrink. Similarly, the time and speed of Novabrink launching new
products and shipping them to its customers can be a disadvantage.

As Brazil is not part of the EU, expanding to Germany could be problematic because
of different tariffs and high logistics costs.

Another final downside would be that Novarbink might be forced to obey a certain
pricing level when entering new international markets.
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2. New Market Selection & Analysis

So far, Novabrink has already sold its products internationally to France, Mexico,
Argentina, Uruguay, Chile and the United Arab Emirates and they are advancing at selling
one product line to Portugal. To find a promising new market opportunity for Novabrink, we
conducted secondary research on several countries that seemed to be promising at the first
glance.

We compared selected countries according to the following criteria:

- current size of toy industry
- growth rate of toy industry (CAGR)
- competition
- number of children
- revenue per capita
- market entry barriers

To narrow down our potential new markets, we looked at the toy market size by
revenue in several countries. As a result, we decided to look closer at some of the largest toy
markets, namely Japan, United Kingdom, Germany and Russia.
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https://www-statista-
com.sandiego.idm.oclc.org/forecasts/758645/revenue-of-the-toys-and-games-market-
worldwide-by-country )

https://www-statista-com.sandiego.idm.oclc.org/study/55492/toys-and-hobby/

The entire toys and games market is expected to grow at a CAGR of 5.1% from 2021
to 2026, according to Statista (“Toys and Games”, 2021) In the following table, we have
compared our selected countries. Based on our research and analysis, we came to the
conclusion that Germany is the country with the lowest risk and biggest potential for
Novabrink’s international expansion strategy.
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Toy Toy competitio number of revenue market

industry industry n children from toys entry
size growth (in per capita barriers
(in billion rate million)
$)

Japan 0.57 1.3% very high 5.4 $34.78 low

(Bandai Namco;
rather anime
products)

UK 4.4 2.6% medium 4.8 $42.36 high

(key players: due to Brexit
LEGO, Hasbro,
Mattel)

Germany 3.6 2.7% medium 4.6 $33.78 low

(key players:
LEGO, Geobra,
Mattel)

Russia 3.2 4.0% high 11.2 $16.54 medium

(key players: 7- due to political
ya, LEGO, instabilities
Hasbro, Mattel)

sources:
https://www-portal-euromonitor-com.sandiego.idm.oclc.org/portal/Analysis/Tab
https://www-statista-com.sandiego.idm.oclc.org/statistics/780535/japan-toys-sales-value/
https://www.statista.com/statistics/671661/sales-toy-market-germany/
https://www.statista.com/outlook/cmo/toys-hobby/toys-games/europe?currency=usd

Market size & growth

The total toy market is $3.6 billion in Germany. The sub-market size of dolls &
stuffed toys in 2019 was $1,974 million and the market size for plastic toys and other toys
was $860 million. This leaves Novabrink with a large addressable market size.
When not looking at the entire German toy industry, but at the market segments of (1) dolls
and stuffed toys as well as (2) plastic toys, it is forecasted that (1) will increase at a CAGR of
5.5% and (2) at 5.2%.

Potential of YouTube
A study has shown that in Germany 39% of all children watch YouTube at least once
or twice per week (source: “Youtube”, 2018). Moreover, there is a German YouTube account
called “Kinder Spielzeug Kanal”, meaning “Kid’s Toy Channel” in English, which has more
than 15 million subscribers. Therefore, the potential of YouTube as a source for partnerships
as well as for advertising, as explained later in this report, is massive.

Factors to consider to successfully launch in Germany:

(1) PESTEL analysis
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political:
Germany is a democratically run country. The political system is governed by the so-called
„Grundgesetz“, which was first established in the 1949 Constitution. Since 1949, the Social
Democratic Party (SPD) and the Christian Democratic Union (CDU) have dominated the
political system. The three wings that make up Germany's government are the legislature, the
judiciary, and the executive. The Federal Republic of Germany's Constitution establishes the
government's basic structure. It specifies the value system that the country should adhere to.
It is the most important authoritative source. Following a system established many years ago
has had certain consequences for Germany. It has a fair bureaucracy where out of 180
countries, it was ranked 12th in the 2017 corruption perception index by transparency
international (“Corruption Percentage Index”, 2018).
Tariff rates declined from 2.09 for 2016 to 1.84 for 2019. Germany is also a member
of the European Union, so it has a very attractive, open trade policy within the EU. Moreover,
the rules stated by the World Trade Organization (WTO), since the EU is a member of it,
Germany is no exception. Competition law and Antitrust law are very strict in Germany,
avoiding price-fixing and many other practices by dominant firms in the market (“Bundesamt
für Justiz”, n.d.).

- economic:
The amount of raw materials in Germany is relatively low. Only potash and lignite are
present in substantial amounts. For Germans, lignite-burning power plants are one of the
most important sources of electricity. It is the world's leading manufacturer of solar power
and wind turbines. Foreign resources, such as natural gas and oil, are sourced from other
countries. About two-thirds of Germany's energy is imported. In reality, it is the world's third-
largest importer of energy.
The service sector accounts for 70% of the GDP. Agriculture contributes 0.9 percent, while
industry contributes 29.1 percent. The majority of items are in the engineering field. They are
proud of automobiles, metals, machinery, and chemical goods, to name a few. The largest
yearly international trade fairs are held in German cities such as Berlin, Frankfurt, and
Hannover. The long-term interest rate was stated for November 2021 to be -0.36% and 0.54%
for August. income taxes in Germany are paid depending on income (“Ycharts”, n.d.).
Tax Rate
Income

Less than 9.744 euros 0%

9.744 - 57.918 euros 14% to 42%

57.919 - 274.612 euros 42%

More than 274.613 euros 45%

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In the upcoming months, it is expected that projected inflation rates will reach 5%, and
German inflation will be overhead 2% in the mid of 2022. Meanwhile, average annual wages
were recorded at € 42,593 (“Reuters”, 2021), (“Glassdoor”, n.d,).

- social:
Around 82 million people live in Germany. As a result, it is the most populous
country in the EU. It is considered to be a modern multicultural country. A wide range of
lifestyles influence society. There is evidence of ethnocultural diversity that is absolutely
unique. Despite several societal changes, the family remains the most significant social
reference unit. Young people and their parents have a great bond. Local architecture, music,
literature, art, and sports are examples of fields that reflect Germany's socio-cultural scene.
Germany has the highest per capita growth in the developed world where unemployment is
6.9% and which is far away from the euro area average of 11.7%. It is a system based on
cooperation and consensus rather than competition. Germany encompasses the entire socio-
economic framework, from the financial system to the industrial or state. It is very important
for Novabrink to know that average German consumers tend to choose prices over brands.
(“German Unemployment Rate”, n.d.)

- technological:
In a variety of ways, the German government supports national research and
technology. It has its own set of laboratories. There are both public and private research
laboratories. Several key types of research and development are supported by the industry.
The Ministry of Science and Technology is the German government's body in charge of
coordinating and prioritizing national science and technology activities. Germany is a
technologically advanced nation. It devotes a significant amount of resources to research and
development (105 billion euros) (“Facts and Figures”, n.d.).

- ecological:
Water pollution is an issue that Germany is continuously facing. Additionally, there is
a rising trend towards sustainable packaging, elimination of plastic waste and recycling of
plastic as much as possible. Additionally, climate change is affecting agriculture. These
ecological trends are supported by Germany’s Fridays for Future movement of younger
generations, which put pressure on manufacturing companies to change their processes,
packaging and ecological footprint.
+ Germany’s recycling rates:
-Household waste: 67%
-Production waste: 70%
-Construction waste: 90%
(“Statista”, 2021)

- legal:
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Packaging has to have specific labels that say that e.g. toys are not made for children
from 0-2 years old if that’s the case for some products. Another legal requirement are labels
that state that toys do not include any hazardous materials that might cause health concerns.
Imported products must have, in addition to a customs declaration in writing, an invoice and,
sometimes, a certificate of origin. As of July 1, 2009, all companies established outside the
EU must have an Economic Operators Registration and Identification (EORI) number to
deliver a customs declaration.

(2) Culture:
German culture has a lower power distance and higher individualism than Brazilian
culture. Hence, interactions with Novabrink’s German, potential partners and customers are
rather informal and do not imply strong hierarchies. In addition, it is much more long-term
and future oriented, so that clients prefer to not sign any short-term contracts for one-off sales
but clients rather look for long-term relationships. However, since German businesses are
very good at negotiating, Novabrink has to be prepared for that in order to get long-term
partnership contracts. Building trust is essential in German business partnerships. For
suppliers, companies demand fulfilling many regulations which increases the time until
contracts and agreements are signed.

https://www.hofstede-insights.com/product/compare-countries/)
(3) Competition:
Direct competitors in the German market with the largest market shares are LEGO,
Mattel, Haba, Schleich, Steiff, Zapf, Hasbro and Simba Dickie, with LEGO GmbH making
the most revenues of € 509 million sales in 2018 in Germany.
- competitor’s pros and cons compared to Novabrink:
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-
(Statista, 2020)
Advantages of German Disadvantages of German competition
competition

- They already have an - Some like LEGO produce partly in

existing, trusted brand China, which is seen as negative
image sometimes by customers
- Strict Antitrust law - Germans prefer educational toys
- Excellent economic made of e.g. wood that are deeply
and political rooted in their culture
conditions - Board games and puzzles are in
- Multiplicity of supply greater demand due to the pandemic
and price magnetism higher production costs
- Diverse customer
choices and tastes
- Fast market growth

(4) Why would German customers buy Novabrink’s products?

German parents typically have 5 occasions for purchasing toys for their children, according to
research:
- 23% as a Christmas gift
- 21% as a birthday gift
- 7% as a reward to the kid
- 3% as a gift for Eastern
- 35% without any special reason, just like that
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- (“BVS”, n.d.)
Therefore, German parents would mainly purchase Novabrink’s products as a special gift for
their children. The most sold toy brands in Germany are Baby Born and Barbie. Due to the
fact that Novabrink’s products are also special characters or replicates of humans, their
product portfolio also fits very well to the German market.
(5) What do German customers value with regard to the buying process and
packaging?
Right now in the movement of Fridays for the Future in Europe, many German people
are into sustainable packaging. Hence, they care about sustainable materials, potentially
recycled plastic and if possible, also recyclable packaging materials. In addition, we
conducted interviews with German parents who have children in Novabrink’s age group.
German toy products are preferred to be very colourful and to have funky packaging to
capture the children’s attention in both the offline stores but also in e-commerce shops.
Moreover, we found out that children often like to watch videos which show them how to use
and play with the toys. Storytelling and imaginatory explanations are major components in
these videos. Showing their children those product usage videos or the children watching
them by themselves is an integral part of the purchasing process before toys are actually
purchased. If parents go to retail stores, the children want to experience an adventure in the
toy store. However, the shift is clearly towards more convenience, so that online purchases of
toys have become extremely popular for parents, because staying in a toy store for multiple
hours sometimes with their children can be very annoying to some parents, as we found out
from our interviews.
(6) Which distribution channels exist in Germany?
In fact, 52% of all toy purchases in Germany are made through the internet. The most
successful toy e-commerce companies are amazon.com with $792 million, mytoys.de with
$376 million, jako-o.de with $76 million and otto.de with $53 million in net sales in 2020.
https://www.statista.com/forecasts/871113/top-online-stores-toys-baby-germany-
ecommercedb

On the other hand, 18% of toys in Germany are sold through specialized toy shops.
Key players in this market are Intertoys and Smyths (which was called Toys “R” Us until
2019 before Smyths bought their retail stores). Another aggregated 18% of toys are sold
through supermarkets, department stores and consumer goods markets like Real, Mediamarkt
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or Saturn. Grocery discounters also sell toys with a market share of 5% including discounters
like Penny or Netto.

https://www-statista-
com.sandiego.idm.oclc.org/statistics/672078/points-of-purchase-toys-germany/ )

(7) Which products should Novabrink sell in Germany?

Definitely, Novabrink should not focus its product selection on products that have a
Brazilian or Latin American context, because there is no connection between German and
Brazilian or Latin American culture and products. Rather than that, Novabrink should sell
selected toys from its existing product portfolio, but primarily new products in the German
toy market. In our view, some of its existing products that have a great potential to also be
sold in Germany are the Miraculous Ladybug, Baby Brink, Reindeer Rouge, Queen Bee,
Frozen, Snowwhite Princess and Princess Rapunzel. The reason for this product selection is
that all of these products have a connection to Disney characters, which are extremely
popular among German children, as we found out through several interviews.
In addition, Novabrink should focus on launching new products in the form of
licensing partnerships for childens’ movies that will be popular in Germany. Moreover,
similar to their past success with the Luccas Neto feature doll, Novabrink should also
establish partnerships with German YouTubers to reach a much larger audience with low
effort. Another idea for new product development would be to make partnerships with
companies in the rising gaming industry, such as with Fortnite. More and more parents want
their children to play with toys that provide them an educational experience through STEM.
In addition, the new products that Novabrink should produce and sell should be made out of
recycled and recyclable materials to cater for rising customer expectations in this field. To
conclude, Germany with its ideal location in the center of the EU mass market should be used
as an innovation hub for new product ideas that might also have the potential to be expanded
to other Western but also other markets in the future.
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3. Market Entry Mode

With the hopes of expanding their brand on an international level, Novabrink should
look into two possible entry mode options, while potentially considering a combination of
them both. It seems the safest entry mode option for Novabrink at this time would be direct
sales involving e-commerce sites that are popular in Germany. The current Novabrink
website is only available in Portuguese, Spanish, and English as of right now, therefore a
motion to add a new German interface would be in their best interest. Data shows that
Amazon has the highest net sales from toys through e-commerce in Germany in 2020.

(https://www.statista.com/forecasts/794070/germany-top-online-stores-germany-
ecommercedb)

In the following, you will find our proposed selection of e-commerce sites through which
Novabrink should directly sell its products.
(1) Amazon.de
To sell on Amazon is a bountiful opportunity for any company, especially ones
looking to expand. With the retailer expanding at an incredible pace, it is hard to find people
who are not familiar with the website. To start selling products on Amazon, Novabrink has
the option of several plans to register for. The “professional” plan is the best course of action
for Novabrink. This plan allows for the company to sell as many products as they want while
being able to advertise and compete to better their product at a monthly fee of $39.99.
Amazon is also the number one e-commerce site in Germany, thus allowing Novabrink to
enter a market which already has millions of eyes on it.
● https://sell.amazon.com/start?ld=seussoagoog-nag004-d

(2) eBay.de
Similar to Amazon, eBay has made its presence known throughout Germany. If not
for the former, eBay would be at the top of Germany’s e-commerce list. The website also has
plans to follow if looking to sell on their platform, with the two most appealing plans for a
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business being the “Anchor” ($299.95/mo) and “Enterprise” ($2,999.95/mo) plans. To start,
Novabrink could enter the Anchor plan and then, overtime, shift towards a full Enterprise
approach. With over 200 million monthly visitors, eBay Germany presents an opportunity for
Novabrink to expand in an unfamiliar territory with low entry barriers and high market entry
speed.
● https://www.ebay.com/sl/tof/business-selling

(3) Otto
Otto is another large e-commerce retailer which is based out of Germany. Although
not as large as Amazon, Otto has a local feeling to it which may appeal to a certain group of
customers. With 57 million monthly users, Otto has become the biggest online department
store in Germany.
● https://www.otto.market/en.html

How could we get even closer to the final customer?

In regards to further connecting with their user-base, Novabrink has previously
engaged with YouTubers who specify in toy reviews. There is a large market surrounding toy
review channels, with channels racking upwards of millions of subscribers. For example,
Novabrink has worked with a channel called “Familia Neto”, a family channel who has
several videos reviewing toys and a fan base of one million people. The company has been
able to advertise their products in an efficient way, as YouTube is a popular website
destination of children whose ages match our demographic. In Germany, there is a channel
called “Kinder Spielzeug Kanal”, which has over 15 million subscribers. With a follower
base as large as that, Novabrink could use the same approach they had with “Familia Neto”
and reap many more rewards, thus helping them thrive in the German environment and build
initial brand awareness.
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II. MARKETING
● We see the highest potential for cost-effective advertising in YouTube ads
● Additional influencer collaborations via mainly YouTube should also be considered
● Our marketing messages would mainly communicate the joy children have from using
Novabrink toys through messages such as “Spezialisten für Lächeln: Novabrink”

4. PROMOTIONAL CHANNELS

A first option is to use YouTube as a paid promotion channel. We would use

YouTube in order to target kids through paid advertisements as well as through influencer
collaborations. Paid advertisements could be targeted at Novabrink’s customer base on videos
that many children in Germany watch. By doing so, we could grab the kid’s attention and the
kids would tell their parents about the products they just saw in an ad.
Earlier we stated that there are several influencers on YouTube in Germany who could
perform reviews about the toys, or just to advertise them. For example before Christmas,
Novabrink could collaborate with different influencers in Germany on YouTube who’s
videos are about family adventures, kids or something similar, and they could give
suggestions to gift Novabrink toys to parents’ kids. Another option for that could be that if
the YouTubers’ kids are having a birthday, the birthday presents in the form of toys could be
sponsored by Novabrink. The amount of sponsorship would depend on the number of
subscribers or number of views the respective YouTuber is likely to generate. In any way of
advertising Novabrink’s products through Youtube influencers, we would ask the influencers
to include a link to any of the aforementioned e-commerce platforms in the video description
so that they can directly promote children and parents to click on that link. The average cost
per click (CPC) on a YouTube video ad is between $0.10 and $0.30. Novabrink should also
consider giving out products for free in addition to a potential commission for influencers.
(“MuteSix”, 2021).

We think that influencers can be considered as a very effective way for promoting the
toys, since it will be trustworthy for our customers. They will see the toys, hear the feedback,
and they will be much more confident in their purchase, as they do not buy something about
which they have prior trust in. Especially, if the influencer is a person that is being watched
by kids on a daily basis, these influencers are a trustworthy way of conveying trust and brand
awareness. Moreover, if these influencers are also active on Instagram or TikTok, then they
have a possibility to add the link to a certain e-commerce page to their Instagram story for
example, so while swiping up or clicking on a call to action, the parents or kids will land on
the right webpage with the selection of Novabrink’s toys to purchase.
As mentioned before, we plan to enter the German toy market via Amazon, Otto and eBay.
As the product variety on these e-commerce platforms is huge, one option of advertising
Novabrink is to provide customers with an opportunity to sign up to an e-mail subscription
list, as they will be informed about newly released toys, discounts, or some specials that may
occur. For the subscription, customers would only need to register with their email, which
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will be the way of receiving all the newsletters. This would be one of the most cost-effective
ways of building and retaining their customer base.
Additionally, as we are a toy manufacturing company, we need to keep in mind that our
purchasing customers are not always our product users, meaning that those who will purchase
the toys will most likely be parents who purchase the toys for their kids. Kids are easily
influenced in early ages, because they usually do not justify any of their wants. Therefore, we
need to impress the kids with unforgettable ads they will remember, so that the kids will then
ask their parents to purchase the advertised toys e.g. in the context of one of the
aforementioned occasions. To impress the kids, we need to use these sources and options
where we will know that kids will have easy access to it.
One option to catch their attention is to use outdoor advertising, for example
billboards, or just posters close to offline toy stores. On these billboards we would advertise
the different online options for customers to purchase Novabrink’s products.
Another possibility to catch the attention is to have small brochures in toy stores.
Usually people do not take the papers with them, but the solution for that could be that after
someone has made the purchase at the toy store, then the cassier can put the brochure inside
the bag. Hence, we would recommend building partnerships with those retail stores. This
option would be a low risk, low cost option, because printing those brochures is inexpensive
and the retailers might get a small commission for each brochure placed into a bag. The
message on the brochure should be something catchy and easy, so that people would
remember it. It would also indicate where they could find the possibility to check those toys
out and where to purchase them. By doing so, we will try to bring customers from retail
stores to e-commerce sites.

Moreover, another effective way to market Novabrink’s products especially to parents

is to use Google ads. When googling any specific words about purchasing toys or even gifts
on the aforementioned occasions, certain ads can appear on the user’s device. Subsequently,
when users then click on the ad, they will be redirected to e.g. amazon.com, eBay or Otto
where they can see Novabrink’s product portfolio. The average cost per click on Google ads
is between $1 and $2 which is rather expensive, but should be tried out as the ads can be
targeted very specifically at people who are searching for gifts or toys (“Wordstream”, n.d.)..

5. Message
- What is the best way to convince consumers to buy the product?
 19

Considering the target audiences of Novabrink, the best way to convince new
customers to purchase their products would be to focus on the joyous emotions each child,
and their parents, experience with Novabrink’s toys. It is evident from social media channels
such as Instagram and YouTube that Novabrink’s products are popular with children and
families in general. Ultimately, the happiness experienced by each child is vicariously felt by
each parent, thus creating a setting of contentment.

Potential Slogans:
● “glückliche Kinder, glückliche Eltern, glückliches Zuhause” / “Happy kids, happy
parents, happy home”
● “das Gefühl der Freude in deiner Handfläche” / “the feeling of joy in the palm of your
hands”
● “die Art von Freunden, die Ihre Kinder haben sollen” / “the types of friends you want
your kids to have”
● “Sie 20 Jahre lang auf die gute Seite Ihres Kindes bringen und zählen” / “getting you
on your child’s good side for the last 20 years“
● “Spezialisten für Lächeln: Novabrink” / “Specialists in smiles: Novabrink”
● “Beste Zeiten mit besten Freunden” / “best times with best friends”
● “Glück und Lachen garantiert” / “Happiness and laughter guaranteed”

Main message and other marketing campaign elements

In regards to aspects to target in marketing their product, Novabrink should first focus
on the element of joy that toys bring to children. Upon doing this, they should look to
incorporate the comforting sense of family and love into their marketing elements. The
emotional effects of these elements can easily influence a parent into purchasing a Novabrink
product for their children. Going forward, all advertising should include some of the aspects
of these previously mentioned elements and use them as a theme for their marketing
campaigns. By adopting a reputation synonymous with a loving home, Novabrink would be
able to penetrate the toy market by further connecting with adults looking to care for their
children.

6. Promotional Materials
We created two examples for promotional materials to reach our target customers.
 20

Social Media and offline print material advertisement:This advertisement is meant to

spread brand awareness about the online purchasing options of Novabrink via e.g.
amazon.com through a poster or a short animation for social media.

Youtube advertisement mockup:This video advertisement mockup should be shown at the

beginning and in between YouTube videos that are targeting children, so that children and
their parents are made aware of our products.

III. Operations Management

 21

● We created a two-folded pricing strategy: for customers with higher purchasing power
and for the mass market of medium purchasing power to test which sells better
● Due to its high quality standards pricing would be rather competitive to other German
brands
● Multiple certificates and regulations exist in the EU, which Novabrink would have to
comply with
● To provide a high degree of convenience and fast shipment, we recommend to use
Amazon FBA in Germany as a low risk warehousing strategy as a starting point

(7) Pricing Strategy

Due to the fact that the German target group is very diverse from the perspective of
their purchasing power for toys with either rich German parents or the massive middle class,
we chose to create two pricing points. First, we want high-priced toys that have higher quality
standards than Novabrink’s competitors and are rather exclusive e.g. through influencer
product collaborations. Secondly, the majority of Novabrink’s toys should be priced at the
same price as their German competitors. By doing so, after the first years in the market,
Novabrink can understand which price point works better and which target group is rather
attracted by their product offerings: either the middle class, or rather the upper class which is
able and willing to buy higher-priced toys.

The following arguments will justify our concrete pricing strategy and go into further detail:
● Novabrink’s products are certified by INMETRO Sistema 5, which is hard to get.
This existing certification reflects quality standards for Novabrink’s products that
are equal or even better than European manufactured products. Hence, the product
quality is at least the same as by German manufacturers.
● We estimated that the German’s average willingness to pay for a doll made by
Novabrink would be €29,99. This estimation is based on competitive prices.
● An option to support the pricing strategy is to bundle different toy characters that
relate to each other from one product line, just like Barbie and Ken or any family
characters. In addition, accessories such as different doll outfits or cars can also be
great upsell opportunities.
A way how Novabrink can support its high-price strategy is through promotional activities
with influencers that have discount codes of 10-15%. Using influencers e.g. on YouTube can
help Novabrink build trust in its product portfolio through their celebrity status, reach and the
kids' admiration for those influencers.

One exemplary pricing for a product that should be priced comparably to similar products of
Novabrink’s competitors might be the MIRACULOUS LADYBUG:
- pricing of a Barbie doll in Germany: €19,99
- our suggested pricing: €19,99

(8) Certification:
 22

Importing toys and other products from countries which are not members of the EU require
the following certifications:
• Two commercial invoices
• Import license
• Certificate of Origin

Certificate of Origin: In two copies from the Chamber of Commerce in the country of origin
for all products marked with a "U" in the "free list", or if the importer must require the same.
- Step One: Get the documentation ready.
- Step Two: Producer authorization to a marketer.
- Step Three: Request for issuance of a proof of origin (or certificate of origin).
- Step Four: Request tracking.
- Step Five: Reply notification.

Imported products must have, in addition to a written customs declaration, an invoice

and, sometimes, a certificate of origin. The Modernized Customs Code (MCC), in force since
2008, simplifies procedures by computerizing and centralizing transactions, among other
services. Since July 1, 2009, all companies established outside the EU must have an
Economic Operators Registration and Identification (EORI) number to deliver a customs
declaration.
Germany requires a certificate of product origin, this means that Novabrink must certify that
its products are clearly from Brazil.

The characteristics and quality of the products are the main requirement to enter the
German market, as well as the way in which those interested in doing business with this
country present their company is very important. So, it is not only about the quality of the
products and services offered, but also about the quality of the personnel appointed to
establish business relationships.

(9) Trade Regulations

Entering into any foreign market has its caveats, especially regarding new trade
regulations which one may not be accustomed to in their home country. Such regulations can
include tariffs, which increase import taxes, or something completely different such as unique
customs duties.

Customs Valuation
The customs valuation process is where the value of goods declared for importation is
determined. There are six different methods of valuation:
1. The transaction value method
2. The transaction value of identical goods
3. The transaction value of similar goods
4. The deductive method
 23

5. The computed method

6. The fall-back method
The “transaction value” method is the most commonplace, as it comprises the entire value
paid / to be paid for an imported good (“Customs Valuation”, n.d.).
Common Customs Tariff
Upon entering the European Union, all products must be declared to customs in
accordance with their classification in the Combined Nomenclature (CN). These goods are
assigned to their classifications using the following system (e.g., woman’s coat):
● Sections
(for example, textiles and textile articles - Section XI)
○ Chapters or subchapters
(for example, articles of apparel and clothing accessories - Chapter 62
■ Headings
(for example, women’s or girl’s overcoats - heading 6202)
■ Subheadings
(for example, women’s coats of wool - subheading 6202 11)
■ Code number
(for example, women’s coats of wool, other than hand-made ponchos or
hand-made capes of wool - code number 6202 1100 90 0
(“Customs Tariff”, n.d.)
Economic Operator Registration and Identification (EORI)
Any and all companies looking to enter the EU must have an EORI number if they
are seeking any sort of declaration, whether it be through customs or simple entry.
This number is to be used for customs clearances. The number is to be requested by
the member state of the company in focus. Once EORI number is obtained, the
company may use it for all exports to any of the EU member states (“Taxation and
Customs Union”, n.d.).

Mandatory Marks and Labels

The above symbol is the “CE” marking and is one of the most recognized markings
required by the EU. The implementation of this marking on products means that said
product meets and maintains all essential requirements (health, safety,
environmental, etc.) of pertinent EU regulations. The category of “Toys” is one of
the several products to fall under the CE requirement ruling. The symbol acts as a
declaration that the product meets all requirements set out by the EU (“Labeling and
Marketing Requirements”, n.d.).

(10) LOGISTICS

We use three primal channels for Novabrink. One of the channels is Amazon, which means
that we can use Amazon FBA, so that no warehouses owned by Novabrink are required, but
 24

we would hold inventory at Amazon’s warehouses. When you put your products on sale on
Amazon, you are automatically signed up for FBA. In FBA, all your products are charged
with a fee of 0.14€ per product.
A similar option is offered by Ebay. Ebay has a fulfillment service which allows sellers to use
their fulfillment centers, where their products can be stored.
Another option for our logistics would be to own a separate warehouse for all the products
that we will order to Germany. This option will be more costly and more risky. Additionally ,
Novabrink would be required to rent out or purchase a high quality warehouse so that product
quality does not suffer from storage.
With our warehouse we consider that we need to partner up with some parcel shipping
companies as well, which could be again costly and time consuming to set up.
To make sure that the orders will have a competitive delivery time of 2-4 days, we would
order a bigger amount ahead, by that we will try to avoid the long waiting days. Having a
higher inventory in a German warehouse will be more costly, however, it is a strong
requirement for offering customers the best possible user experience.

(“Fulfillment by Amazon”, n.d.)

(“FBA Fulfillment Needs”, n.d.)
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