January 10th, 2018
Toy manufacturing industry – Market position of rivals
In the U.S market, Mattel Inc. is the market leader with net revenues that have exceeded $5 billion since the year 2006 (Mattel Inc., 2011, p. 24). Hasbro Inc., controls the second largest market share globally with its net revenues having crossed the $4 billion mark in 2008 (Edgar online, 2011, p. 22). The third company in the American market is JAKKS Pacific Inc., which recorded its highest revenue, $903 million, in 2008 (JAKKS Pacific Inc., 2011, p. 41). Globally, the Lego Group enjoys the third largest market share, surpassing JAKKS Pacific’s revenues, with over $2 billion being recorded in 2009 (Datamonitor, 2010a; The Lego Group, 2011).
The market shares of the companies have various implications for different players. As the market leader, Mattel Inc. must strive to maintain its market share through such aspects as enhanced promotion activities and introduction of innovative products on a constant base. This would be the case since the toys industry in the U.S. has remained relatively constant in the last five years with 2009 experiencing a negative growth (Datamonitor, 2010b). The growth in Mattel Inc.’s revenues has been relatively lower as compared to growth in Hasbro Inc.’s over the period 2006 to 2010 (Mattel Inc., 2011, p. 24; online, 2011, p. 22). Hasbro Inc. has achieved almost a $1 billion growth during this period while Mattel’s growth has been almost $200 million (Mattel Inc., 2011, p. 24; online, 2011, p. 22), implying that Hasbro could eventually become the market leader if its growth proceeds at the current rates. JAKKS pacific, on the other hand, has realized negative growth in the three-year period ending in 2010 (JAKKS Pacific Inc., 2011, p. 41). Due to its higher financial resources, Mattel should dedicate more resources to product development and promotion top avoid losing out to Hasbro. Use of a competitive pricing strategy could also help Mattel to avoid losing out to Hasbro. For JAKKS pacific, focusing its strategy of differentiation rather than pricing could help to avoid losing out to the larger players who have the financial potential to engage in pricing wars (Porter, 1985). Go to part five here.