You are on page 1of 28

MTKG 310 Due Date: March 11, 1994 International Marketing Introduction

Assignment #04 Section #12

Toys are fun. Since it is almost Spring Break, I decided to research something fun-the toy market-for this assignment. However, "this business is not for the fainthearted. Predicting what kids want (and what their parents are willing to buy) is a perilous way to make a living." (Moskowitz, 1990, p. 274.) I have decided to market Hasbro Toys Inc.'s Mr. Potato Head in France and I believe that it will work. Company Information Hasbro Toys, Inc. was incorporated in 1926 by Henry and Hillel Hassenfeld. (Moodys Industrial Manual, 1993, p. 3185) They originally sold cloth-covered pencil boxes and other school supplies. When pencil makers raised their prices in 1935, they began producing pencils as well; this began Empire Pencil, which is the largest pencil manufacturer today. (Moskowitz, 1990, p. 273) They started making toys in the 1940's after Henry's son Merrill suggested it; and, they succeeded with war toys. (1990, p. 273) They invented G.I. Joe in 1964 and grossed over eight million dollars in two years due to the consumer's interest in

the evolving Vietnam Conflict. This turned against Hasbro later when anti-war sentiment rose and competitors began to take over that market. (1990, p. 273) Of course, they brought it back and -2G.I. Joe is still around today. In the late 1970's, Merrill's sons, Steven and Alan, tried to start a gourmet cookware line that eventually failed; then, Teron the Terrible also failed. This made Uncle Harold take Empire Pencil away from Hasbro because its profits were being eaten by his nephew's toy company.(1990, pp. 273-274) The eighties were better for Hasbro. The Hassenfeld brothers invested in research for My Pretty Pony, GLO Worm, and TransFormers while bringing back Tinker Toys and Mr. Potato Head. (1990, p. 274) They also bought Knickerbocker Toy (Raggedy Ann), Glenco Infants, Milton Bradley (who owned Playskool, board games, and Lincoln Logs), Child Guidance (Sesame Street Toys), Tonka Corporation, and Coleco Industries (Cabbage Patch Dolls). (1990, p. 274) Hasbro also started "Romper Room" and "Bowling For Dollars. (Pg. 275) Hasbro Toys Inc. is an international toy corporation. Hasbro Toys has a great hold on the toy market because it has purchased many of its competitors. (Moodys Industrial Manual, 1993, p. 3185) Its major competitors are Mattel, Fisher-Price, and Kenner. In 1990, Hasbro Toys was number 1 in toys, board games, and baby bibs; and, it was number 2 in preschool toys, while Mattel was number 2 in toys. (Moskowitz, 1990, pp. 273, 275)

Product Information The product I have chosen is Mr. Potato Head. Mr. Potato Head is a toy in which a child (or adult) places eyes, ears, -3lips, feet, arms, and a hat on a plastic model of a potato. When it first came into the market, a pipe was included but was removed after complaints about influencing children from antismoking lobbyist groups were made. (Interview with Robert Harris, former lobbyist for RJ Reynolds, 3/8/94) This product has been on the market for at least two generations and probably will be for many more. The price is reasonable. It is approximately fifteen dollars. (Interview with Wal-Mart Toy Sales Associate, 3/8/94) It has risen throughout the years. The place of distribution is anywhere toys are sold in the U.S. Hasbro owns property in the U.S., Canada, Spain, Netherlands, France, England, Australia, Hong Kong, Belgium, Greece, Mexico, Walles, Japan, Germany, Wales, New Zealand, Switzerland, Italy, Hungary, and Singapore; thus making it easier to sell internationally. (Moody Industrial Manual, 1993, p. 3185) Hasbro Toys, Inc. has 24 subsidiaries and 18 concern foreign nations. (1993, p. 3185) Mr. Potato Head is promoted by parents' experiences with it as children, displays and packaging, tv commercials, and usage in schools. This toy is as common as the Barbie Doll (a Mattel

product, by the way); practically every child has access to a Mr. Potato Head and they usually want one after playing with it. (Moskowitz, 1990, p. 275-276) There are three target markets for this product. First, there is the children from 3 to 10. They will be most influenced -4by commercials, packaging, and peers. Next is adults who buy toys for those children. Last is school teachers and principals who may purchase them as classroom toys. Both parents and school personnel will use their own experiences with the Mr. Potato Head in selecting it for home and school usage. Country Information I have chosen to market the Mr. Potato Head in France. "It is already here, but not as common as in the States. I brought one back from the U.S. to give to my kids." (Interview, Robert Brower, French basketball coach from the U.S., 3/8/94) Mr. Brower, my uncle, explained that most French people are Roman Catholic but do not attend Mass regularly. Also, the economy is socialist yet moving toward capitalism; it is very stable and presents a good market. (Brower Interview, 3/8/94) My uncle then explained that "French children are more apt to be given what they want in comparison to American children." (Brower Interview, 3/8/94) He is married and has two children. There are three potential target markets that I have found

and they are similar to the ones in the U.S.. First is children between 3 and 10. Another is adults with young children. And the final one is the Minister of Education so that French schools may place Mr. Potato Heads in their elementary school classrooms. Marketing Plan I am going to select the children between 3 and 10 as my -5target market because "...most French adults did not grow up with a Mr. Potato Head in their toy chests..." (Brower Interview, 3/8/94) Since French children do typically get their own way, it is imperative that I capitalize on that fact. France is westernized and the French like American products; however, I cannot sell an American Mr. Potato Head to French kids. Therefore, I must alter our marketing mix to suit the needs of our new French consumer. The product, or produit in French, must be changed. Maybe add a beret to Mr. Potato Head's hat, or chapeau, collection. It also needs a new name. Monsieur Pomme du Terre Tete, a direct translation, is difficult to say; therefore, I should call it "M. Pomme du Terre," or simply, Mr. Potato. Naturally, the package and insert will be in French. The price should remain relatively the same in comparison to American Mr. Potato Heads. "This is roughly 75 francs, or 15 dollars." (Brower Interview, 3/8/94) Mr. Potato Heads can be made in Le Bourget du Lac, Savoie Technolac, or Patin in France or the

main manufacturers in Rhode Island. (Moodys Industrial Manual, 1993, p. 3185) The place of distribution is the same as in the U.S.anywhere toys are sold. "Nowadays, toys can be bought anywhere in France-from the countryside to Paris. There's always somewhere to buy toys." (Brower Interview, 3/8/94) There really is no need to alter this part of the marketing mix. The promotion of this product should be stronger than in the -6U.S.. Since French adults typically do not have experience with Mr. Potato Head, I must get the kids involved. Perhaps along with the commercials, I can produce a cartoon tv series or a movie starring M. Pomme du Terre. I could even invent new characters and bring them back to the U.S.! I would try to get M. Pomme du Terre into the French schools as a classroom toy. Another thing that could be done is to create a phenomenon similar to Coleco Industries' Cabbage Patch Kids boom in the early 1980's. Hey, French kids get what they want; it could happen! Conclusion Toys are great fun for all ages and people of all nations. Putting the Mr. Potato Head in the French toy market would be a sensible investment. Hasbro could profit and maybe even invent new characters in the M. Pomme du Terre line. These new characters can be marketed in the U.S. as well. Hasbro can

capitalize in the 1990's.

-7-

Bibliography
1. Brower, J. (1994, March 8). Interview with Robert Brower, French basketball coach who grew up in America. 2. Brower, J. (1994, March 8). Interview with Robert Harris, former lobbyist for RJ Reynolds. 3. Brower, J. (1994, March 8). Interview with Wal-Mart Toy Sales Associate, DeKalb, Illinois. 4. Hasbro, Inc. Moodys Industrial Manual. Vol. I, 1993, p. 3185. New York: Moodys Investors Service, Inc.. 5. Moskowitz, M., Levering, R., and Katz, M. (Eds.). (1990). Everybody's business: A field guide to the 400 leading companies in America. New York: Doubleday Currency.

Jennifer M. Brower Case 2-2 The New Europe February 28, 1995 MKTG 367-1

The New Europe

The formation of the European Common market is changing the way that nations do business with Europe. There are several obstacles and opportunities presented to the European Market. Also, Japanese and U.S. firms will have to alter their marketing strategies to meet these challenges. Last, it is unlikely that the EC will establish a political union within my lifetime. The formation of the EC will permanently affect international business.

The EC, or European Common Market, presents many obstacles and opportunities for itself. First, a discussion of the opportunities of the EC is needed. The EC's 1992 agenda attempts to realize a consolidated European market which will allow free movement of goods, capital, and people within its barriers. Through deregulation and

changes in law, the European market has been given the opportunity to grow in a more open and competitive marketplace. This will permit greater access to more products at lower prices for European consumers. This new openness will allow the European private sector to flourish through new business strategies, distribution systems, computerized support systems, and business alliances. Also, the former communist bloc of Eastern Europe will be able to bring its economies into the twenty-first century. Last, foreign economies will contribute to building a stronger Europe because they will have fewer tariffs to pay, or no tariffs if they build factories within the continent. It is a triumph for free trade advocates within Europe. Foreign firms must find ways to use these opportunities to their advantage in order to survive.

However, the EC faces some obstacles as well. Consider the cultural disintegration that will occur because national borders, currency, and separate national identities will no longer exist. European people, who are extremely proud of their heritage and culture, will no longer have their ethnic identity and will need a few generations to forget their cultures. Also, the consolidation of currencies will cause a decrease in the EC currency when including the Eastern European economies and will complicate EC economic policy. Third, nations that have been at war with each other for centuries will have to work together as one economy to produce the best products that they can. Last, some nations, especially those that were behind the Iron Curtain, are not as well educated in contemporary technology as others. Foreign firms can take advantage of these shortcomings to advance themselves in the European market.

Japanese and American firms need to adjust their marketing strategies to meet the challenges caused by the EC's "Fortress Europe." First, these nations will have to become an insider by building facilities within European boundaries to take advantage of the EC's strengths while capitalizing on its weaknesses. Next, Japanese and U.S. firms must follow closely all political and economic changes made by the EC and its nations so that they can be competitive in Europe. Also, U.S. and Japanese firms will be required to train their employees in foreign language and how to interact with a new and different European culture. Last, U.S. and Japanese firms must realize that these changes are not threatening to them; but, they open up a stronger European marketplace that will purchase and accept more foreign exports which is a blessing for the U.S..

I believe that the EC will not form a political union within my lifetime; however, it probably will be very close by the end of the next century. A political union involves the integration of both economic and political policies. Before the EC can become a political union, it must first integrate its economies and currencies into an economic and monetary union.

In the area of economic integration, there have been movements within the European boundaries to integrate the economies of Europe into an economic union. The 1992 EC agenda began the formation of an economic union which would introduced a single market where goods and people could move about freely. However, the Delors Committee stated

that the basic elements of an economic union include a single market, a joint competitive policy, and coordination of macroeconomic

policies. There have been movements toward a single currency and central bank by 1999; but, the EC is not yet an economic and monetary union. Last, all European economies are not similar due to different interest rates and currency values which do not allow a joint competitive policy or coordination of macroeconomic policies. Thus, the EC must become an economic and monetary union before becoming a political union.

In the area of political integration, there have been some movements toward a political union. The goal of the EC is to have a political union similar to the United States. Already, many European countries have given a significant amount of their sovereignty to the EC. The EC has been debating about common defense and foreign policies; strengthening the role of the EC Parliament; and, adopting an EC social policy. The nations did agree in 1991 to give the EC authority to act in defense, in foreign, and in social policies.

It is doubtful that a political union, if made now, would last long. The difference in inflation rates and goals would pose a problem. Also, no country wants to give up its sovereignty for economic reasons. There is already infighting among the member nations. Also, the social dimension can only be achieved if European history is forgotten or if nations are consolidated at a slow pace. Perhaps this political union could occur if cultures are forgotten, the economies become more similar, and sovereignty is surrendered little by little. This would

take many generations learning the new ways of European culture and developing a European economy.

The

European The

Common European

market Market

is

changing

the

international obstacles and

marketplace.

presents

many

opportunities for itself. Japanese and U.S. firms must alter their marketing strategies. The EC will not form a political union within my lifetime. The EC is forming a new Europe.

Interview With: Patrick Voss District Sales Advisor, Marion Merrell Dow Inc. Pharmaceutical Sales

Jennifer M. Brower MKTG 446-2

February 20, 1995

Marion Merrell Dow Inc. P.O. Box 179 Bloomingdale, IL 60108-0179 800-321-0855 #8163

Sales Manager Interview

The pharmaceutical industry is a dynamic, competitive field that requires an adaptable, ambitious sales force. Some new salespeople are afraid to enter this industry because new products and constant change can cause confusion and frustration. The sales team must be properly prepared and have a strong home base within the sales office. In this industry, the role of sales manager is crucial because he is responsible for keeping the sales force motivated and educated.

On February 14, 1995, I spoke with Mr. Patrick Voss, a District Sales Advisor for Marion Merrell Dow. Marion Merrell Dow is a Fortune 500 company and a global leader in the manufacturing and selling of pharmaceutical products. Our conversation took place at eight o'clock in the evening on the telephone. The following is a synopsis of our twenty minute conversation.

The first topic that we spoke about concerned the background

needed to become a sales manager. In this industry, it takes approximately five to seven years to be promoted to sales manager. Mr. Voss became a sales manager after working at Marion Merrell Dow for three years due to his time spent selling products in related fields like the hospital market. He also had training in leadership and communication skills. He said that interpersonal communication, organization, and leadership skills are needed by every sales manager.

Next, we spoke about the transformation from salesperson to sales manager. Generally, this change can be difficult because it requires the person to look at the situation from the "big picture." Sometimes, the new sales manager must give up the self-designed daily routine for an office schedule. Since there is no immediate peer group at first, the sales manager often will get frustrated because of all of the new responsibilities and tasks.

Mr. Voss said that his transition period was challenging. However, he felt that he had the necessary set of skills to make that transformation. He thought that the new time demands were nearly the most challenging part of the change but he knew that he could deal with them. He had some formal training but his skills he had learned from being involved in sales in the industry helped him.

The third topic concerned ethics. Many companies have specific rules in a Code of Ethics that guide managers through difficult situations. Mr. Voss said that his company has good strategies for dealing with those who break ethical guidelines. His role is basically

proactive in that he informs his salespeople what the standards are and what the company policy is when those standards are broken. He faces very few problems in this area because most can be solved through company policy and he has an efficient sales team.

The next topic concerned the sales manager's responsibilities. The two major responsibilities that Mr. Voss has is to ensure the marketing and sales of the products and to train his salespeople. His leadership is important because must motivate his salespeople in order to keep sales increasing. He teaches new salespeople through his own example and acts as a "guidance counselor" for the more experienced salespeople. In order to do this, he must have good interpersonal communication skills, leadership qualities, and organization skills.

Fifth, we discussed the reward system, evaluation, and territory designation. Along with a large commission, successful salespeople can join sales clubs like Champions, Masters, and the MMD Club. Salespeople are recognized at regional and national levels. There is also the chance to win the coveted MMD ring. These honors bring prestige and esteem from peers. Thus, the salespeople are compensated financially and nonfinancially.

Salesperson evaluation can be tricky as it will vary with the individual. There are two basic areas of evaluation: qualitative and quantitative. The quantitative concerns primarily the comparison of the change in sales by year. In the qualitative area, there are eight subjective categories that are core competencies. These indicate the

level of skills that the salesperson has.

Territory designation is complicated. It is based on various factors like workload and the number of physicians, area hospitals, and prescriptions. However, the territory is geographical and is designated through the work of a consulting firm.

The last topic we addressed was recruitment and motivation of the new salespeople. In the area of recruitment, there were four basic methods: campus recruiting, networking, professional organizations, and a limited amount of newspaper advertising. This can become complex due to all of the laws concerning Affirmative Action and the EEOC.

Mr. Voss wants his new salespeople to be motivated from the beginning of their careers. They can begin their attempt to qualify for the sales clubs and reach other incentives. He also tries to keep a fun, open, and honest environment inside the home office so his salespeople can take those ideals out in the field with them. Finally, Mr. Voss gave the following advice to those who want to become sales managers: research the industry, get to know others, and arrange a ride-day with a salesperson for an accurate view of the industry.

In my personal opinion, this industry is very exciting and interesting. By moving from salesperson to sales manager, it seems as though that feeling of dynamics is not lost just because the manager is no longer working in the field. I prefer to have an environment of constant change and positive stress.

I agree with Mr. Voss that the best part of the job is the opportunity to develop good people. However, I also agree that time demands can be the least liked part of the position. Regardless, there really is no way to change that element in any industry.

Last, the pharmaceutical industry needs sales managers who can keep the sales force motivated and educated about new products. My conversation with Mr. Voss showed that he is one of those sales managers who keeps the company competitive through motivation of his

salespeople. His insight has given me a favorable and more accurate perception of the pharmaceutical industry.

Mr. Patrick Voss, District Sales Advisor c/o Marion Merrell Dow, Incorporated P.O. Box 179 Bloomingdale, Illinois 60108-0179

February 22, 1995

Dear Mr. Voss:

I have enclosed a copy of the sales manager interview that we did on February 14, 1995. This report was an assignment for my Sales Management course. Thank you for agreeing to help me with this assignment! class

I am pleased with the number of representatives from many industries that I met at the Meet the Firm Night earlier this month. Speaking to you about your company and industry was very helpful in my search for the industry that best suits me. I am now definitely going to apply for a sales position within the pharmaceutical industry.

Again, thank you for your help and your kindness!

Sincerely yours,

Jennifer M. Brower 198 Douglas Northern Illinois University DeKalb, Illinois 60115 1-815-753-3932

McDonalds Corporation Jennifer M. Brower February 9, 1995 MKTG 495-4

McDonalds Corporation

In early 1990, McDonalds Corporation faced a dilemma. Sales were not as high as predicted due to the changing, hostile fast food environment. During the 1980's, McDonalds had to deal with rising food and labor costs, the changing American lifestyle, the trend toward healthy eating habits, and intense competition from other fast food chains, microwave-ready foods, and delis.

The problem concerned change. It was obviously necessary to adapt to the changing environment; but, it was also necessary to keep the McDonalds image of quality and fast service that the consumers knew and wanted. What strategy should McDonalds use to give the company a competitive edge and allow it to stay first in the industry throughout the 1990's?

There are three alternatives. The first is the "Health Conscious" strategy where new, healthy products would be introduced. Baby-boomer consumers would be willing to pay more for quality healthy foods. "Healthy Value Meals," similar to the "Extra Value Meals," would include combinations of salads and grilled chicken sandwiches, juices/diet soft drinks/herbal teas, and fat-free pretzels and snacks. Also, foods containing 33% or less fat calories and a nutrition guide would be emphasized in advertising. Advertising would include

newspaper ads, radio ads, and television commercials featuring active people and sports heroes as spokesmen with current advertising expenditures. Perhaps a health conscious McDonaldLand character could be invented to reach children.

Another

strategy

would

be

the

"Discount

Price"

strategy.

McDonalds would emphasize lower price, higher quality than the competition in its current advertising. Advertising would be through the same media as in the above strategy but would use the "Common Man" as a spokesman. Promotions can include 2 for 1 Big Macs or hamburgers and Value Cards that allow a customer to receive half off the next purchase after ten visits. Advertising and promotion expenditures would be increased slightly but would have a worthwhile return.

The last strategy is the "New Product/New Market" strategy. Ethnic products like McPizza and healthy foods like the grilled chicken sandwich could be introduced. Also, a new item would be introduced through a "Specialty of the Month" promotion. New stores could go into the newly liberated Eastern Bloc nations and the Orient, Europe, and Australia. Also, home delivery could be test marketed in suburban and rural locations. Joint ventures with gas stations and convenience stores could also be tested. Promotions and advertising would be through the same media channels as previously described with the "We're changing for you" slogan with a strong customer service theme.

There are three criteria to apply toward the analysis of these strategies. First, profitability is of great concern. Next, the possible consumer reaction will be considered. Last, the competition's reaction will be predicted.

The "Health Conscious" strategy would be profitable for the company. The cost of salad items and poultry will be less than that

of beef. Also, labor costs would be met due to the increase in price. However, a niche health conscious market may have to be created which can take time and may lower profits in the short run. Consumer reaction is easily predicted. Since the trend is toward better eating habits, consumers will be happy to see a healthy alternative and will be willing to pay more for the product. It may take a while for McDonalds to overcome its past emphasis on fatty foods but this will pay off in the end. Intensive advertising is necessary to get this message across to the public, especially children.

The competition will react in several ways. First, it will try to improve its healthy food items. Also, a price war will erupt. last, the competition may try to hurt McDonalds' image by disproving its definition of what a "healthy food" is.

The "Discount Price" strategy may help profitability in the short run. However, lowering price will cause consumers to think that the product quality is lower than it was. The long run result is a loss of the McDonalds fast service, quality food image that must be preserved. This will definitely harm sales and drive McDonalds out of the number one spot. The customer will appreciate the lower price in the short run but eventually product quality will decrease due to a high total cost per item. The customer will then leave for better quality. Also, it does not adapt to the changes in the American lifestyle and eating habits. The Value Card is a decent idea but those cards often get lost and can get confusing at times.

The competition will be ecstatic. This could cause a price war, lowering McDonalds high quality image. It may not topple the McDonalds empire; but, it may be injured. Also, McDonalds does not have as great a variety of healthy foods as the competitors do.

Last, the "New Product/New Market" strategy can be profitable. Overseas, labor costs will be cheaper and most people do not consume as much beef as Westerners do, causing lower wholesale beef costs. Expansion may not show much profit at first; but, a niche like the joint venture with gas stations can be created that would be a first for the fast food industry. Long run profits will be elevated if a new market is pursued.

Consumers will be encouraged to think of McDonalds as an innovator and an American tradition at the same time. They will enjoy the "Specialty of the Month" because it gives more variety. The overseas market is a prime market and would be receptive to the American tradition of McDonalds with adaptations for their own cultures.

The competition will go overseas and look for ways to expand the market since they are also being affected by the hostile environment. If McDonalds goes into these new markets and invents new products first, they will stay on top and will be competitive. The competition will be second in those new markets and the public will perceive the new products of the competition as facsimiles of McDonalds products.

Action must be taken immediately. To continue with the same marketing strategies can be devastating to McDonalds. They would not be able to have a competitive edge or stay on top for long.

The best strategy is the "New Product/New Market" strategy. The "Healthy Value Meals" could be the first to be introduced in test markets as soon as possible. The grilled chicken sandwich could be the first "Specialty of the Month" promotion. Overseas McDonalds locations can be established within six to nine months. And, a test market of home delivery would be researched.

Heavy advertising must take place two weeks prior to each promotion. Also, general advertising would be strong in the U.S. and adapted toward the cultures in each nation. The advertising budget will have to be expanded by about 20% but it will be well worth it. By using this strategy, McDonalds is going to be the best fast-food chain in the 1990's!

Jennifer M. Brower March 2, 1995 MKTG 495-3 Case #3 Thompson Respiration Products, Inc. I. The Problem

The Executive Vice President of Thompson Respiration Products, Victor Higgins, faces a changing marketplace in his industry. Since the beginning of TRP's operations and the portable respirator industry in the 1950's, his company was practically the sole provider of portable respirators. Now (1986), sales have fallen by 20% due to its aggressive two primary and several secondary competitors. The current distribution method is through dealers who must follow a restrictive "best efforts" clause. This clause scares away potential dealers. Mr. Higgins must find a new method of distribution which will increase Thompson's market share. II. The Alternatives The three alternatives include: *Keeping the dealers as the primary method of distribution but changing the "best efforts" clause. *Making hospitals the primary method of distribution. *Using hospitals and dealers as the distribution method with no "best efforts clause". III. The Solution The alternatives must be examined according to their possible profitability, meeting the objectives of TRP, and providing the best service to their patients. Alternative 1 will interest more dealers in providing TRP products which will greatly increase sales and maintain the current high customer service standards provided by the dealers. Alternative 2 will open up a new market to increase potential sales but may not maintain as high a level of customer service as the dealers do. Alternative 3 will cause TRP's potential market to increase even more, increasing profitability while meeting TRP's objectives and maintaining high customer service. Doing nothing will decrease profitability, market share, and customer service because there will be less income, fewer customers, and a lower service standard may cause patients to use other products. Therefore, Alternative 3 is the best choice because it will be most cost-effective, will cause an increase in market share, and will allow customer service standards to remain high.

Thompson Respirator Products, Inc. Case #3 Jennifer M. Brower MKTG 495-3 March 2, 1995