Introduction

This report aims to produce a detailed analysis that evaluates the marketing strategy of Toys R Us ltd. The main goals are to present relevant and up-to-date marketing information on: The industry as a whole through the use of the PESTEL framework and recent industry information, major macro environmental factors, recent growth and changes in the industry, market location and main product categories will all be examined.

The company itself through company research and use of the company website, the report will examine what products the company sells, the markets in which it operates, the main customers, the market position and the overall strategy.

The main competitors using industry and competitor information, with specific attention on why and how they compete.

The marketing strategy through detailed research of the available company information, a market analysis will be carried out with specific attention to the positioning, pricing, promotion and distribution strategies.

Key performance measures and overall strategy drawing together the findings from the report and make recommendations were necessary.

The report will achieve this analysis through detailed and relevant

research into the marketing activities of Toys R Us in conjunction with the work of key marketing writers. Company advertisements, website, brochures and stores will all be examined to assist with this. Various marketing and business resources will be used throughout the report in order to fully understand the companys marketing strategy.

Industrial Analysis
The P.E.S.T.E.L analysis is a structured approach to analysing the external environment of an entity. The influences (current and possible future influences) of the environment on the entity are grouped into categories (Wilson and Claussen, 2007). There are a number of macro-environmental influences that are likely to affect the Toy and Game industry over the next number of years. The PESTEL model helps to categorise them into various sections. The key sections in relation to the toys and games industry are mentioned below:

Economic
A number of factors are currently having a negative impact on world economic growth. These include the ongoing fall-out from the credit crunch, declining house prices in many of the major industrialised economies and rising commodity prices (DETI, 2008) (Appendix 1). Consumer confidence has been considerably lowered as consumers have found themselves with less disposable income and an inability to attain credit.

Social
The UK has seen an increase in birth rates in recent years due to rising fertility among UK born women and partly because there are more women of childbearing age due to inflows of female migrants to the UK. (UK Statistics Authority, 2008) (Table 1). Table 1

Overall the UK population is increasing year on year with a number of factors contributing: higher birth rates, migrants staying longer and a drop in mortality rates. (UK Statistics Authority, 2008) Recent government reports have shown an increasing obesity trend in the UK, with a rise in the percentage of children aged two to fifteen who are obese. This has led to government legislation to encourage and change peoples healthy living attitudes (UK Statistics Authority, No. 38, 2008).

Environmental
Increasing pressure from the European Union for local government and councils to recycle means that the industry has had to look at ways to reduce packaging on products and use packaging materials that can be recycled (UK Statistics Authority, No. 38, 2008).

Significant Growth and Changes in the Toy and Games Industry

The Toys and Games Industry has been in a period of growth since 2003 (Figure 1). Figure 1 The Total UK Market for Traditional Toys and Games by Value at Current Prices (m at rsp), 2003-2007

Keynote (2008) Until recently, the market has benefited from a positive trading environment where an upturn in the birth rate has led to a rise in the child population. The recent changes in demographics will ultimately mean that there will be more customers for the industry, especially over the next few years as the children grow older and as birth rates continue to grow. The aforementioned economical factors have and are likely to lead to a considerable slowdown in the industry growth and sales levels. If the UK economy does slip into a recession these effects will only worsen. The industry can expect this slowdown to affect the current growth levels for at least a year if not longer. The previously discussed obesity trend has led to the introduction of government legislation to encourage and change societys attitudes to healthy living. The results of this pressure can be seen in society today, through an increased awareness of healthy living alternatives. As expected, the industry has seen a growth in activity toys and outdoor toys and games. This active/healthy living market is growing and more opportunities exist for the industry to capitalise (Social Trends, No. 36, 2006 and 38, 2008). The industry will need to react to environmental demands and look

at how they can change their packaging to use fewer materials and to recycle more. This could be done through altering the manufacturing process, using recycled materials in packaging or adapting production to fit with new legislation.

Main Product categories in the Toy and Games Industry

The main categories in the market are: Infant/pre-school toys and games Activity toys Games and puzzles Outdoor and sports toys and games Dolls Action toys Vehicles Plush toys Other products.

(Appendix 2)(Keynote, 2008) Figure 2 shows the percentage of sales each of these categories contributes towards the industry total. Figure 2 Contribution of each category to the total sales of the toy and Games Industry

(Keynote, 2008)