“We visualise and develop creative educational tools that provoke inspirational activity and bring positive recurring stimuli for children in their learning process and creative play. We believe on the power of creative education.” – Innospark Our team has chosen Innospark, Lithuania, which is actually a new company who produces educational toys for young children. Education is very important aspect of each persons life, especially in this century, so having the children start their educational journey in the early age is very important. Growing bigger, becoming a competitor on the Lithuanian market, Innospark decides to go outside the local market and take a chance on different European markets. Us being able to choose the market we came to agreement to have two markets, first Poland and second, Scandinavia. Considering that Poland is one of EU’s fast developing countries, which also has a lot of investors coming from around the globe and where the middle income is growing rapidly, we decided that Innospark would have a big chance in conquering the Polish market fast.
Also there is almost no competition on the market, on their particular product. Scandinavia on the other hand is developed and open for new companies, giving them new opportunities. Even though, there is one actual competitor, Innospark has different kind of products which can easily compete with the others. Our decision on the entry mode is direct export. It is easy to implement in smaller countries, trade barriers are reduced to minimum, because all the countries are EU members and capital requirement is limited. The potential of getting profits are greater, because of the intermediaries are eliminated. All aspects of the transaction are controlled by us. We know who are customers are, our customers know who we are and business trips are more efficient and effective with meeting the customers face to face, for more confidence and trust.
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Customer relations are one of the most important part, they will feel more confident and secure with our product, once we establish the worming contact with them. We also have to have a total control over the negotiations and transactions, also the patents, copyright and trademarks. For future plans we are considering bigger improvements and expansions on the markets. We also considered about three employees with standard salary (Poland), proximately 410 euros, which is a normal salary for Poland. Advertisement for our product will be throughout the internet. First the webpage of Innospark and the possibility of Facebook, opening a page is free and getting more customers will be faster and easier, we also would be able to advertise our page with a very low cost.
1. Market Segmentation
As stated in the previous section, the market has been segmented by Innospark into two distinct customers, i.e. individuals and businesses. Individuals: The purchases made by this segment are usually single purchases for own kids or someone known to the individual customer. The demographics of this segment can be classified as: An average household income of 1500 Euros
Parents have high aspirations for children with respect to education and development Businesses: This category includes business clients who buy toys for children. These clients are also organizations such as day-care, as well as school-based organizations like pre-school and/or nursery. This segment generally caters for seven to twenty five children.
2. Target Market Segment Strategy
Exporting is a method of increasing sales potential for businesses. To go international, a company does not need to be big in size or have a huge marketing department. The Lithuanian market represents enough sales potential for Innospark. However, it is important for the firm to grow and the only way to do so is by exploiting the untapped markets, one of them being Poland. As per Euromonitor, the traditional toys and games market in Poland has been dominated by global brands for many years by companies such as Lego, Hasbro, Mattel and Simba. These companies have dictated general trends in the Poland toys market. This indicates that the Poland toys market represents a good opportunity for Innospark since consumers seem to be accepting global brands. Apart from increasing the customer base, exporting would also mean increased market share, and therefore increased profitability by lowering per unit cost. As per a general trend, an average order from international customer is often larger as compared to that from a domestic buyer.
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This means that exporting its toys can result in an increase in Innospark’s perceived size and stature. Additionally, it will also improve its competitive position, as compared to other similar-sized startups in its sector. Through growth in business, Innospark may also look at overseas licensing, franchising, or may even set up its production unit in Poland. Additionally, the educational toys that Innospark is offering are very unique and innovative in nature. This opportunity can be exploited by commanding greater profit margins in Poland than in Lithuania. Although Lithuania helped the export-oriented economy in avoiding exchange-rate fluctuation by pegging the Lithuanian currency (the Lithai) to the Euro in 2002, other fluctuations in the economy and business cycles cannot be avoided altogether.
Diversifying the market is therefore a feasible option for Innospark to reduce the risks. Also, exporting the products to Poland will help put the idle capacity at work, which will help Innospark to enjoy pure economies of scale with toys that are more global in scope. These products are also most likely to have a wider range of acceptance globally in the long run when Innospark grows and penetrates into other markets. From consumer point of view, Innospark will have to make sure that it offers products of the highest quality at a competitive price in Poland.
If it becomes successful as an exporter, chances are highly likely that the educational toys will have increased acceptance in Poland as well due to Innospark’s heightened efficiency and focus on product quality. Lastly, Innospark also stands to gain from the export activities by a potential gain of knowledge. The myriad experiences and gain of information on new technologies, marketing ideas and product line extension that it will have in Poland can help Innospark to improve and grow not only its export business, but also the domestic business.
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3. Entry mode
As both countries (Lithuania and Poland) are part of EU, trade barriers are minimal. With reference to this information two the most attractive ways for “Innospark” to entry the new market has been selected:
Indirect exports
Direct exports
Criteria
Indirect exports
Direct exports
Implementation
Find an export agent or freight forwarder from Poland, which could handle exporting and would be responsible for coordinating, could be a good choice, as local employees know their home market (customer’s needs, ways to attract them) better. Directly export products to customers (could be wholesalers or individual consumers) which are interested in purchasing them, without any intermediaries. This could lead to a better representation and protection of company’s trademark.
Involvement in process
Requires minimal involvement in exporting process. The company would be responsible only for finding any kind of intermediary (export agent or export managing company, freight forwarder, etc.).In that way “Innospark” would be able to continuously concentrate on Lithuania’s market and at the same time increase its market share in Poland. Requires maximum involvement in exporting process as company becomes responsible for developing understanding of a marketplace, handling logistics of shipment, collecting any kind of payments that might be needed to be paid, implementing support service. The market share in Poland might increase greater; however, domestic market would be a little bit “neglected”.
Risk
Almost none. This is the best way to field-test export potential for certain products. It might appear that it takes more time, money, energy than company is able to afford.
Responsibility
Intermediary would be responsible for failures, because indirect export requires minimal involvement in processes – there would always be someone to point the finger at if something went wrong, or not the way it was expected. The “Innospark” would be accountable for its failures. Being responsible for all exporting process will demand more effort from every level of the company.
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Potential profits
Profits would be lower.
Profits would be greater.
Control
Company would lose control over foreign sales because of the intermediary’s existence in the exporting-selling process. Company would have a better
control of all phases of the transaction (ex. Shipment, selling, etc.)
Contact with customers
“Innospark” would have no direct contact with its customers. As a result, company might lose the opportunity to get to know the evolving needs of the consumers. “Innospark” would have direct contact with its customers. As a result, not only company will be able to get to know its customers and their needs, but also customers will know who “Innospark” is.
Business trips
Business trips might seem useless as company would be step removed from actual transaction because only intermediary would be able to know the latest information. Business trips would be efficient, useful and informative. There would be an opportunity to meet customers responsible for representing the products of the company.
Long-term goals
If suddenly the long-term outlook and goals of the company change, the reorientation of the company will be harder as production would already be in someone else’s hands. The reorientation would be easier as the “Innospark” would be the only unit responsible for exporting production of the company to Poland.
As it is clearly visible from the table above direct exports has both, advantages and disadvantages. Analogue situation is with indirect exports. However, because the one of the main concerns on which is based the decision which entry mode should be selected, is contact with customers, the advantages of direct exports had outweighed advantages of indirect exports.
With reference to information mentioned previously, the suggested entry mode for “Innospark” to entry Poland market is – Direct exports. The “Innospark” will focus on two types of consumers during this entry: Individual consumers (ex. parents, grandparents, aunts, etc.) Wholesale consumers (ex. kindergartens, daycare centers, etc.) The main and most important question is – why? Why consumers are such an essential part of the entry mode? The table below should answer this question.
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Reason
Explanation
Consequences
Better margins
Despite the fact that sales scope will be smaller, margins will be higher.
More profit
Closer contact with customers
Stronger relationships which lead to loyalty will be developed by selling directly to customers, excluding any kind of intermediaries. This will form a more accurate feedback – better knowledge about evolving consumers’ needs. Products that satisfies consumers’ needs better > Customers’ loyalty > Word of mouth advertising > Increase in the market share > More profit More efficiency
Fewer layers involved in distribution
Simpler managing of the distribution processes
Future plans
“Innospark” will sell direct to the consumers and also to wholesaler purchasers, who will be responsible for representing the trademark and the products of the company. While this entry mode (Direct export) creates more work for “Innospark” in terms of generating sales, it provides better margins. Additionally, this process will be more costly, having in mind not only money, but also time and energy, for the first few years; however, once loyal relationships will be developed with individual consumers as well as the wholesale purchasers, the marketing expenses will decrease extremely as the customers become familiar with the “Innospark’s” extraordinary and exclusive products and continue to make purchases. What is more, loyal customers will not only constantly acquire products, but also introduce them to their friends, family members, etc. – company will get free word of mouth advertising.
4. Industry Analysis
The toy industry in Poland is characterized by many different domestic toy manufacturers (ex. TUBAN, KANWIL) also as global manufacturers who exports their production to the country (ex. Mattel, LEGO).
Nevertheless, there is a niche of educational toys which „Innospark” can take advantage from as this niche is quite new (within the last five years) and more legitimized nowadays comparing to the situation ten years ago when it was believed that toy can’t have any educational value – it was assumed that toy is just a meaningless way to occupy children giving parents’ a brake from parenthood. Only recently it was proved that there are some special designed toys which not only attracts children’s attention but also teach them constructrive skills at the same time as develop their imagination and ability to concentrate. It would be a great opportunity for „Innospark” to establisth itself while this niche is not overloaded.
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As it is clearly visible from the table above, competitors mainly focus is on eco-friendly wooden toys or constructors. “Innospark” would be like a “gust of the fresh air” in the Poland’s market with its creative solutions applied to make outstanding educational toys and wide assortment of the products.
5. Staffing policy
We decided to start with Warsaw and hire local staff, because, introducing our product, advertising will be more efficient in capital city than in other small towns. The minimum salary will be 405 and more, depending on the work level (Minimum wage in Poland is 404,16 €).
The salary will be transferred to their accounts which also can be opened by us in one particular bank, which will be better for the company for not loosing money in transferring etc. We also will have 3 employees, till we expend on the market. Decision is to use local staff.
Reasons:
Local employees and managers know more of the local market and therefor can build reliable and trustful relationships with the customers. Local customers may prefer interactions with local employees and managers due to the common cultural background and lack of language barriers. Local managers and employees working together can increase employees morale, work satisfaction, organizational commitment and as a result effective performance. 6. Marketing strategy (business scheme)
The business scheme will point out the fact that products are absolutely educational tools that are entertaining. This is a meaningful message because parents will desire their kids to play with this kind of toy. The essential feature of the „toy“, in the product is used to make the kids bound with the product, something mostly hard to do with most educational tools. “Innospark” create ideas in our minds and develop creative educational devices that provokes developmental activity and makes positive recurring stimulation for kids in their studying process and creative play. “Innospark” trust in the capability of clever education. Cleverness- clever person is a curious explorer. Let’s create a place where creativity grows Hopes, goals- the first years of children’s life are most important time in the growth of hopes. Let’s have the hopes high.
Permitting- a kid so deeply wants to believe his or her wishes can come true. It is our job to help them build a feeling of inner confidence, fearlessness and toughness. Progress- cleverness has developed into a highly treasured skill in the century. It is an important building block for changes in business, history and nowadays life. Let’s grow clever The business scheme will identify and describe for the fact that there are two definite client groups that must be drawn attention to. To take the awareness of both groups sees that the groups are very dissimilar despite the fact that they are buy identical product. (http://www.edu2.lt/lv/kas-mes-esam/) “Innospark” will use direct mailings and advertisements. “Innopark” is a new company, is a little two years old, so for the beginning we recommend choose the „Innospark” website (http://www.innospark.lt/).
Will be used like the main tool to spread the product. It will be a cheap and productive way of spreading information regarding and its product. The site will be divided in two fields, one for general information and the other for dealers/traders. The second part will have greater amount of information outside business information like stock. Also, “Innospark” as a new company, choose the Internet as a cheaper and more effective your advertising apparel and corporate types. To ensure the effective promotion of the search results, one of the ways to register “Google AdWords”. Next would be placement of advertisements in various, popular international social networks such as “Facebook”, “Twitter” etc. Social networks provide advertisements wide spread not only the Internet but also Internet users communicating with each other, as well as commenting on a product on the Internet, writing reviews, etc.
Often, when choosing a product, service or business other people’s reviews are crucial selection. Homegrown web sites the opportunity to advertise, is the largest news portals.Like the ad placement site, an important aspect of creating their advertisements, is to choose the advertising audience. Audience determined to run at end-customers, which is a very important part of a successful advertising campaign. The website business scheme is easy to understand and clear, have the webpage shortcuts on all available materials as well as mention it in all talks with clients. To make it easy to find for greater amount of people. Will add the site to more spacious extent of search engineers so even if a specific customer is not informed of but has knowledge of the product category, they will still be pointed to site. 6.1 Sales strategy (Marketing scheme)
The marketing scheme will be adjusted for every client group. The marketing scheme for individuals is to make plenty knowledge of. So that clients are asking their dealers to carry for them. To address the marketing part it is future plan that the businesses are not just purchasing one or two of the items but that they are purchasing entire products addressing dissimilar abilities, all of which are valuable. In most cases this is particularly valuable as businesses repeat clients, meaning that if buyer is satisfied with the bought item, they will probably become a long term clients and not search for other dealers. 6.2 Operations strategy (Action plan)
Will make manufacture widely popular of all of its products. We choose the publicizing system for many reasons: None of them have been involved in manufacturing action Popularizing will lower the cost to smallest amount, making all products costs variable Popularizing will make it available for the business team to pay more attention on marketing and new product growth Minimizing the possible financial dangers by not committing to the cost of a manufacturing facility Making business plans sales grow bigger
Bibliography
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About Money. Retrieved from http://importexport.about.com/: http://importexport.about.com/od/DevelopingSalesAndDistribution/a/Direct-Exporting-Advantages-And-Disadvantages-To-Direct-Exporting.htm Innospark. (2012, December).
Innospark. Retrieved from http://www.innospark.lt/ Martins, R. (2014, November 28).
Poland. Retrieved from http://www.tradingeconomics.com/: http://www.tradingeconomics.com/poland/gdp-growth www.eulerhermes.com. (2014).
Country Reports. Retrieved from http://www.eulerhermes.com/: http://www.eulerhermes.com/economic-research/country-reports/Pages/Poland.aspx?gclid=Cj0KEQiA-uWjBRChu9ie05m5ipgBEiQAuHIuK_uF1FFr62ciCHwCl1nLspSxhq8sG8r3y0oqDNP-1IQaAsK68P8HAQ www.investopedia.com. (2014).
Retrieved from http://www.investopedia.com/: http://www.investopedia.com/terms/m/marketsegmentation.asp
