Case study on Rose Toys

University Degree Business and Administrative studies

Case study on Rose Toys

) Rose Toys is a small firm, which has limited funds to spend on Advertising and making the product. They have been producing a range of good quality toy trains for an age group of about 10 years old. But there product sales are declining and for 3 years sales have decreased. One reason for the decline in sales could be that the trains that Rose Toys are selling could be out of date. Another reason could be that 10 year olds are now interested in computers and there is no need for a demand of good quality toy trains. With this problem the owners of Rose Toys have 2 options. Firstly the company could carry on with the production of their 'good quality train' and hope that the sales pick up again. Secondly they could scrap their declining train and produce a push along train, which is aimed at a lower age group. This push along train will be more basic and could be produced in masses.

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However the owners themselves have to resolve their differences. There are two sons and a father who own the company but one son is trying to convince the other two that changes must be made before the company goes bankrupt. He suggests to them that Rose Toys should get rid of their old styled train and replace it with a cheaper more basic one. But they still believe that sales can pick up again and they seem to be trying to cling onto the idea that fad toys will die out. Fad toys are products, which sell dramatically and then decline once they have been around for a while. An example of this is 'The Teenage Mutant Ninja Turtles' who were a big hit in the late 1980s. Every year a fad toy is released mainly around the time of Christmas where sales rise. As you can see Rose Toys must find it very hard to compete in such a popular market.

There are so many toys being released in the Christmas period the Rose Toys Company will have to persuade the owners of large outlets to sell their toy. But it is very difficult to arrange a price with the large shops because they want to make a profit and so do Rose Toys Company. If Rose Toys sold their product to a large toy store such as TOYS R US for £3.99 then to make a profit TOYS R US will have to sell the product at about £7-£8. This is not going to happen because TOYS R US could just import a cheaper product from a country like Taiwan where they can produce more efficiently due to the labour being so cheap.

There is also a battle between companies of who can advertise the most effective. This is another weakness that the Rose Toys Company has because they only have £40,000 to spend on promoting their product. Although that seems like a large budget to spend it is only about a quarter of what big firms will have to invest. Companies who are competing with Rose Toys like Fisher Price and Tomy spend about £200,000 on Television advertisement.

2) The son who wishes to produce the push along train decides to visit an advertisement agency. An Advertisement agency suggests strategies and ideas of how a company can promote its product. There are a number of ways how to do this but Television and Radio are the most effective. The Rose Toys firm were advised to promote their product on Sky television. Sky television is a good way of advertising because it is a little cheaper than normal television channels and it is still broadcasting to millions of potential customers. The advisers also told them that the numbers of people watching would rise steadily over a period of years. Although Rose Toys couldn't afford to have a long amount of airtime they can still produce a 10 second commercial which could be played over a period of two weeks. Rose Toys aim is to advertise shortly before the Christmas period so that mothers can take out their children to buy the toy. But of course a company larger than them with more resources can out bid and slot into Rose Toys aimed position. If you could put the companies who are advertising in an order of wealth then Rose Toys are certainly near the bottom. So the best Rose Toys can do is to advertise sometime in the October region. They hope that it is not too early but it will have to do.

Overall Rose Toys could never of gained enough customers to make the toy stores order another batch. Rose Toys may of thrived during the 1960s but the increase in production abroad and the changing of the market just ended the growth and lifeline of the company. The rose family didn't leave the market without a fight but in the end the big American companies came out on top.

Tony Brown