Toys R Us Marketing Strategies: Success & Failure

Introduction-- There are many factors at play with regards to the rise of the toy business Toys R Us in worldwide renown. Among the important elements at play here is the role of marketing and how the business's marketing contributed exceptionally throughout the periods of great success and humbling defeat for the business. Toys R United States handled to realize one of the efficient company formulas: offer something with a consistent market, and the toys that the business offer constantly have kids excitedly awaiting every doll, action figure, bicycle or basketball that adults will purchase at Toys R United States, adoringly cover in a present wrapper and lodge under the Christmas tree or by the kid's bedside.

Unfortunately, the formula for success for Toys R Us is not as simple as gift-wrapping or gift-giving, and this paper will attempt to recognize some of the bottom lines that mark the success and failure of Toys R Us' marketing strategies and efforts and provide an analysis on why things resulted in such possibility.

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Effective marketing - There is no doubt that the marketing efforts of Toys R Us in the past were certainly effective. The company is very good in letting individuals know that Toys R United States is the place to go to for toys. The marketing effort of Toys R United States was so great that despite the fact that the majority of critiques do not find the stores of Toys R United States as at the minimum appealing and enjoyable, parents and other adults in requirement of toys buck the Toys R United States experience just due to the fact that Toys R Us had the ability to stand real to the message of its marketing technique - that each and every single toy is found inside every Toys R United States.

Diorio (2001) wrote about this particular scenario wherein marketing and advertising totally outplayed the factors that might have pushed customers away, saying that “Toys R Us built a brand experience that brought customers into noisy, cavernous warehouses, where bikes and dolls and baby strollers were packed to the rafters and children were drag-racing around the aisles in shopping carts. Despite these unappealing features, adults packed the store, especially during the holiday season, because the Toys R Us brand was esteemed for its breadth and depth of inventory. Whatever the hot toy of the moment was, a parent could find it at Toys R Us (Diorio, 2001, p. 75).”

Toys R Us, despite the problems it faced in the past, should be commended nonetheless for the efforts that it continually explores and undertakes to provide its marketing strategy with the much needed flexibility. Toys R Us and its marketing efforts and strategies have consistently considered both the changing features of its target market as well as the changes happening among its production and manufacturing alliances.

In doing so, Toys R Us and its marketing is providing the company with flexibility and more options for their current and future marketing attack. “Age compression has meant shorter and shorter life cycles. Therefore, toy retailers [and] manufacturers need to accelerate their response to the market. Toys R Us is proceeding in the right direction by helping manufacturers to design toys. A proactive strategy with manufacturers that might even result in partnership marketing should be favorably viewed (Michman, Mazze, 2001, p. 204).”

Seiter (2003) pointed out that “Behind My Little Pony and Ghostbusters toys stand developments and strategies now institutionalized in the US toy industry today; deseasonalization, the encouragement of toy buying at times other than the Christmas season; character licensing, the use of popular fictional characters for a fee or a share of the profits as the design or decoration on toys; consumer research, in the form of test marketing; and line extensions, new characters and accessories added to successful toys (Seiter, 2003, p. 194).” This idea points to the changing social condition which Toys R Us, through its intuitive marketing acumen, took full advantage of.

No one is really sure which institution started the cycle that made the shift possible and society-altering; some say its television and the mass media while others say that there were conscious efforts for toy makers to add an additional thrust so that there is an every growing consciousness for the need to buy their products; some say it is the handiwork of the businessmen who foresaw the social changes that will make it perfect for the new role of toys in the human social life while others simply believe that it was a case of everything coming together and hitting the once in a lifetime jackpot that established the toy store as one of the legitimate and solid industry in the facade of the modern business world.

Whatever the real reason was, the only thing certain is that Toys R Us and its marketing efforts were clearly in tune with the changes that happened in the course of time, allowing them to establish a niche for itself and a name that many other companies would attempt to defeat in the years to come. For what it is now, Toys R Us clearly owes it to strong and solid marketing of the brand.

Marketing and cross cultural efforts - Another solid point for Toys R Us marketing is the vision of the company to expand outwards towards foreign countries and develop plans for cross cultural marketing which fitted like a glove. Take for example the case of the Toys R Us expansion in Japan: despite the prevailing status quo when it comes to toy marketing and selling, the pre-Toys R Us Japan have a more complex way of doing things, something that they are not ready to disregard in exchange for the new Americanized system.

But because of the insistence and soundness of the approach that Toys R Us is bent on taking when it comes to their marketing and overall efforts in the Land of the Rising Sun, Japan and its erstwhile unwavering style in toy selling finally yielded to the pressure made by Toys R Us.

As Herbig (2005) noted in his book Handbook of Cross-Cultural Marketing, “Japanese toy manufacturers have traditionally sold through the convoluted, multi-tiered distribution system of Japan and initially refused to sell Toys R Us. Toys R Us retained its marketing strategy of signing low-cost direct supply contracts with manufacturers who also provided promotional funds. Toys R Us, by buying direct from manufacturers, eliminated the multiple layers of wholesalers which was so prevalent in Japan (Herbig, 2005, p. 197).”

The result was fast growth and great market acceptance. By the time the company marked its second year stay in the island, Toys R Us already have 16 superstores, and it will increase to up to 35 two years later. The Japan operations of Toys R Us were letter perfect and yielded a very positive income report, even surpassing the $10 million dollars that the US companies earned via the 20 million US dollars worth of income in the Japan base of operation.

Clearly, the Japan expansion of Toys R Us once again showed the strength not just of the company's operational capability, but also highlighted the success in the market project and marketing efforts that the company have designed and pursued in the belief that it was the action plan necessary for success. Barging inside the tightly-knit culture of Japan and cornering the supply of one of the important aspects of Japanese childhood is no easy feat, especially with the fact that almost every business entity in Japan - wholesalers, retailers, owners of lots for lease, etc - were hesitant to support the American brand that brings with it the American culture of trade and commerce.

But Toys R Us managed to survive and pass with flying colors, a feat owed largely to the solid marketing of the company, making Toys R Us and its efforts in its Japan expansion one of the textbook cases in cross cultural marketing. As Melville (1999) puts it in his book, “Toys R Us came to be as a test case, and it did successfully enter and challenged established Japanese toy wholesaler-retailers in price, variety and patronage. Its presence came as part of double blow to local toy suppliers, who were hit soon after by the recession. In 1991, the year Toys R Us entered Japan, seven Japanese toy retailers went bankrupt; in just the first ten months of 1996 there were 15 toy retailer bankruptcies (Melville, 1999, 198).”

The failure in the Dutch front - While Toys R Us showed strength in marketing in the Japan front, there are also some weak spot for the overall cross cultural effort of Toys R Us. One of the examples of the failures of the Toys R Us when it comes to marketing competitively globally through sound marketing strategies happened in the Dutch operations of Toys R Us. When Toys R Us tried to establish itself as the toy supplier giant among the Dutch as it was among US and Japanese consumers, Toys R Us found out that its marketing strategies and efforts, along with some logistic and operational concerns, where not sufficient and sound enough to break the existing toy store blocs found in the country. As Furse (2007) noted in his book The Law of Merger control in the EC and the UK, “Toys R Us was one of the largest toys retailers in the world, and the Dutch subsidiary was wholly owned by the US parent. However, in the Dutch market, the Commission accepted that Toys R Us suffered from structural weaknesses and made marketing errors which severely limited its ability to compete strongly on the Dutch market (Furse, 2007, p. 175).”

US cross cultural marketing - But the idea of cross cultural marketing strategy that Toys R Us was brandishing in countries outside of the United States will be put to good use when the issue of producing ethnically correct toys hit the consciousness of Toys R Us to brass.

Despite being hailed as the land of the free where everyone is created equal under God, the gods of toymaking seemed to be not putting too much attention to the fact that there is a growing concern in the fact that not all girls with ethnic background wants to be transformed into the blonde, leggy Barbie; some are voicing concerns over the fact that despite being dubbed as the store with the largest selection of toys, Toys R Us do not hold sufficient number of toys which are ethnically correct.

The question now for Toys R Us is this - what if all of the non-white girls clamor for dolls with skin color similar to them? The Barbie supply line cannot answer that, and counting the number of patrons that the company is set to lose if actions are not made immediately to address the supply of ethnically correct dolls, Toys R Us knew it did not need a calculator to have an overview of an impending massive income loss, ergo the shift towards supporting the creation and sale of ethnically correct toys.

Chin (2001) wrote, “For minority toymakers, attempting to refashion the racial diversity on the shelves of a large retailer like Toys R Us or Target, their task is convincing these eight-hundred-pound gorillas that ethnically correct toys can make money, not that stocking their stores with a multicultural array of toys is the socially progressive thing to do. Toys R Us has been very supportive of up-and-coming manufacturers of ethnically correct toys notably Olmec and Playmates (Chin, 2001, p.161).”

Signs of uncertainty in the marketing front - Some analysts wonder why it took so long for Toys R Us to jump into the e-commerce bandwagon and protect its new sales channel: online purchasing. Kalakota and Robinson (2000) believed that Toys R Us, along with other big named entities, are not very much sold to the idea of selling online, guessing the reasons why these entities they called the ‘traditionalists’ are not willing disciples of the new form of trade which many consumer opted for because of convenience, above all the other reasons. The unsure stance of Toys R Us when it comes to embracing e-commerce was no doubt one of the reasons why its marketing aspect experienced a temporary glitch.

But Toys R Us have a reason for opting towards hard, solid traditional marketing and market strategy. “Opposing the trend and protecting the status quo are the old guard, big retailers such as Toys R Us, and manufacturers of brand names, such as Mattel, Hasbro, and Parker Brothers. The traditionalists are worried that selling to customers directly will wreak havoc on their finely tuned retail channels, pricing structures, and channel distribution (Kalakota and Robinson, 2000, p. 36).”

            The Folly of Toys R Us – Some would say that one way of looking at Toys R Us’ problematic 1999 year ender is to consider that the problem of the company originated from the fact that it was very, very good in marketing and advertising. But of course, that is just one piece of the truth. They were very, very good in advertising and marketing but was at the same time very, very bad in logistics, preparation and management that the incompetency in the production and management line was somewhat attributed to the marketing and advertising teams’ strong and consistent effort.

People might ask what happened and how come some fingers are pointing towards the efficiency of marketing and advertising efforts for the problem that haunted Toys R Us before, during and a few months after the Christmas season. Here is a retrospective of the scenario that set off one of the most horrible moments in the history of Toys R Us and the performance of its marketing, advertising and production and stock inventory teams.

            By 1998, e-commerce was experiencing a very good upswing when it comes to consumer dependency on online purchasing. Among those which were sought and paid online were toys. By Christmas, the peak of the toy-buying frenzy, Toys R Us, with its weaker online presence compared to its competitors, was nowhere near the top 20, let alone the top slot. Diorio (2001) reported about Toys R Us’ dismal performance online, “Online, Toys R Us got a late start into electronic selling. First mover advantage went to eToys.com, which became the fifth-most-visited retail website over the 1998 Christmas season. Toysrus.com came in a dismal 33rd in the same year's ranking and posted a $132 million net loss for the quarter (Diorio, 2001, p. 75).”

Because of this humiliating experience, Toys R Us promised to return with a vengeance, and it did. Bolstered by a strong online presence the following year, Toys R Us is positioned where they should have been the previous year, at the top of the list of consumers who are looking at buying their toy supplies for the season online. By the time Toys R Us knew they were top of store based and internet based toy selling, everyone was satisfied with the way marketing and advertising outmuscled the odds and reversed the situation at Toys R Us in less than twelve months.

But the air of celebration will be short lived, because an impending tragedy is set to hit Toys R Us, impacting them with the same blow as they experience the previous year, only in a different form. With orders coming from online purchasers for toys pouring in a fast pace, the company found out soon that it does not have enough to cater to customers.

Long before Christmas, the company stopped receiving and taking online orders, and many consumers were outraged over Toys R Us, with what seemed to be a case of misleading marketing and advertising campaigns by the company; for the consumers, it was simple – they were made by the marketing and advertising efforts to believe at something that the company cannot really deliver.

“In the debacle that followed, lawsuits were filed, thousands of disgruntled customers were issued credits and $100 gift certificates, and the company paid a $350,000 fine to the US Federal Trade Commission to settle claims that it had misled customers. Hundreds of news reports disparaged the company name. While eToys also reported some inventory problems, the brand damage was far worse at Toys R Us (Diorio, 2001, p. 75).”

Conclusion - Over the years of its operation, Toys R Us have learned many important lessons because of its success and failure in the marketing side of operations. Take for example the meltdown in 1999; the important marketing strategies that Toys R Us learned from that particular experience include customer care and the opting for intelligent operations for particular course of action.

"The Toys R Us experience underscores the importance of customer care in branding. No online initiative is worthwhile if a customer's Web experience damages the reputation of the brand. In the end, Toys R Us found it was best to co-brand with an experienced partner. For many traditional companies, sacrificing corporate ego - partnering to brand online instead of going it alone - may be the better path to building an online reputation" (Diorio, 2001).

But perhaps, the most important marketing move made by Toys R Us is reflected in the understanding of the role, significance and market power of toys in the overall economic and trade landscape, and the effort to maximize this situation by creating a marketing effort built and designed to squeeze out every ounce of juice-profit from this currently existing social scenario.

Seiter (2003) provided an insightful scenario on what circumstance exactly did Toys R Us managed to make the most of, and using not just mere luck or happenstance but intensive marketing effort to ensure not only the sustenance of such circumstance but also the longevity of the social trend that has engulfed homes and families transcending financial, social and cultural boundaries. Toys R Us, after all, markets itself as a toy store that is not bound by financial, social and cultural limitations; everyone can find something for them and their child in the store, or so their campaign efforts consistently remind the public.

“Each of these can be readily observed in the retailing practices and physical space of the giant of the retailing industry, Toys R Us, where licensed toys are found in the greatest abundance of the cheapest price of all toy stores. Toys R Us and the mass marketed nationally advertised goods (known in the toy industry as promotional toys) that fill its shelves offer one version of the toy culture (Seiter, 2003, p. 193).”

Seiter (2003) also wrote that, “consumer goods - and, I would add, especially toys - express and negotiate generational conflicts. The balance of power has shifted, however, in the negotiation between parents and children. Mass media targeted at children have shortened the period of exclusively parental influence over children. A distinctive, peer-oriented consumer culture now intervenes in the relationship of parents and children, and that intervention begins for many children as early as two years of age (Seiter, 2003, p. 193).”

Simply said, social factors enhanced the pressure for children to demand toys from parents and for parents to yield to this need. Toys R Us comes into the equation by marketing itself as the place wherein the negotiation between the parent and child can be settled. Everyone goes home happy. The resulting business success of this marketing strategy makes Toys R Us the happiest of them all.

Toys R Us also deserves an A for their effort for supporting and selling ethnically correct toys, erasing the notion that Toys R Us is serving the needs of the exclusive toy buying white upper class American, and in the process expanding the market base via the general acceptance of individuals despite their cultural differences. What Toys R Us managed to do in this particular instance is mark a victory in the effort against marginalization, and this particular effort was realized again by the move of Toys R Us to recognize changing social weather climate and adjusting to these changes to allow income and growth to come in and make the changes profitable for the company.

“Mattel launched its much-vaunted Shani doll in 1991; during the 1992 Christmas season Toys R Us was quietly and cautiously test-marketing ethnically correct dolls in Atlanta and Philadelphia. Toymakers who could not rely on the sell-appeal of the Barbie connection held their collective breath...All the major toymakers - Mattel, Hasbro, Kenner and Tyco - rushed a variety of line to market, and Toys R Us hired the Mingo Group, the nation's largest minority-owned advertising agency, to launch a marketing campaign aimed at African American consumers (Chin, 2001, p. 161).”

Recommendation - One of the recommendations that any professional would make is for Toys R Us, despite the blunders it made in the past involving marketing, to never stop changing and adapting to the times. Industries are subjected to the change being imposed by the changes that happen in the different social strata like economics, technology, trade and politics. Toys R Us should not stop and ponder too much on its mistakes and instead look ahead so that no other similar bumps would be experienced in the future.

Michman and Mazze (2001) explained that “niche retailers in the toy industry have acknowledged that many time-honored ways of doing things are rapidly becoming obsolete. An operating reality for niche retailers has been the departure from past strategies that has been made possible new technologies. Many formulas that were successful in the past have led to failure. Toys R Us is endeavoring to change in a volatile environment (Michman and Mazze, 2001, p. 204).”

This is a good sign for Toys R Us, a company which should be given due credit for managing to surpass critical challenges that sometimes sent the marketing team to the ropes. Yes, credit goes to them because while Toys R Us is in the business of selling play things, they also made sure that they come out ready to play, despite the changes that might have affected the company and the industry where it operates.

References

Chin, Elizabeth M. (April 2001). Purchasing Power: Black Kids and American Consumer

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Diorio, Stephen (November 2001). Beyond “e”: 12 Ways Technology is Transforming Sales

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Furse, Mark. (February 2007). The Law of Merger Control in the EC and the UK.UK: Hart

            Publishing.

Herbig, Paul A. (January 2005). Handbook of Cross-Cultural Marketing. Taylor & Francis,

            Inc.

Kalakota, Ravi and Robinson, Marcia (December 2000). e-Business 2.0: Roadmap for

            Success. Addison-Wesley.

Melville, Ian (April 1999). Marketing in Japan. Butterworth-Heinemann.

Michman, Ronald D. and Mazze, Edward M. (February 2001). Specialty Retailers –

            Marketing Triumphs and Blunders. Greenwood Publishing Group, Incorporated.

Seiter, Ellen. (August 2003). Sold Separately: Parents and Children in Consumer Culture.

            Rutgers University Press.

Toys R Us (2008). Retrieved June 11, 2008, from www.toysrus.com

Wolk, Martin (March 2, 2006). Toys 'R' Us wins suit against Amazon.com. MSNBC.

            Retrieved June 11, 2008, from http://www.msnbc.msn.com/id/11641703/