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Imagician’s Competitive Strategy: Building a Challenger Brand in Indian Toy Industry

CASE STUDY, STRATEGY
ET Cases, 21 Pages
AUTHOR(S) : Syed Abdul Samad and Dr. Nagendra V. Chowdary

Case Preview

Imagician’s Competitive Strategy: Building a Challenger Brand in Indian Toy Industry

While no one would dispute the importance of toys for children, the companies manufacturing them would be scrutinized for their financial prudence, market share, ROIs, etc. Having worked in toy Industry for about 2 decades and convinced with its imminent business potential, Adnan Chara (Adnan), CEO and MD, established Imagician Playthings LLP (Imagician) in 2016 and clocked in a revenue of INR10 crore within a year. While the organized players command 30% of the Indian toy market, it is the small and local players that have 70% of the Indian toy market.1 Buoyed by the initial success and the growth potential Adnan set out for himself the target of clocking in revenues of INR100 crore by 2022. However, with both domestic and global players charting aggressive market penetration strategies and being present for more than a decade, and with the ever-changing kids’ toy requirements, would Adnan be able to succeed in making Imagician a challenger brand in Indian toy industry?

Indian Toy Industry

History of Toys in India

India had a glorious tradition of toys since the days of Harappa and Mohenjadaro civilizations (5000 years ago). Toys were designed on the basis of how a child would react to them. They were not just meant for a child’s entertainment but also to develop their minds, social development, impart learning, and its application to real life. Indian traditional toys and games were simple, easy to use, colourful and took inspiration from nature, the surrounding environment and people’s lifestyles, prevalent tradition and culture of the region (toys of gods & goddesses, puppets, dolls, miniatures of various items like carts, utensils, pots, cups, fruits, animals, birds, vehicles, etc.).

There was huge diversity in the style of traditional toy making across India because of its varied cultural and traditional practices. Toy making was majorly a cottage industry, where toys were produced by local artisans and craftsmen communities spread across India. These communities worked with many materials, including terracotta, wood, clay, reeds, glass, pith, bamboo and paper-mâché...............

Exhibits

Exhibit I: Toy Industry Value Chain

Exhibit II: Large Toy Manufacturing Units and Clusters in India

Exhibit III: Import of Toys in India

Exhibit IV: Share of Various Brands in the Indian Toy Market

Exhibit V: India’s Competencies as a Toy Manufacturing Hub

Exhibit VI: Toy Segments and Brands – Imagician’s Brands (in Bold)

Exhibit VII: Imagician’s Operating Model

Exhibit VIII: Indian Toy Standards Prescribed by BIS

Exhibit IX: Market Opportunity for Organized Players

Annexures

Annexure I: Traditional Toy Clusters in India and product categories


1 Rajiv Singh, “No kidding: When toys mean business”, https://brandequity.economictimes.indiatimes.com/news/business-ofbrands/no-kidding-when-toys-mean-business/59658547, July 22nd 2017 (Accessed date: May 5th 2018)

Teaching Note Preview

Imagician’s Competitive Strategy: Building a Challenger Brand in Indian Toy Industry

Synopsis

After completing the first year of operations in the Indian toy industry and clocking a turnover of INR10 crore, during 2016-2017, Imagician Playthings LLP’s (Imagician) CEO and MD, Adnan Chara (Adnan), had nurtured an ambitious goal of reaching INR100 crore revenue by 2022. While the Indian toy market promised tremendous potential of around INR8,000 crore, the glaring fact was that 70% of the market was captured by unorganized players and only 30% was pocketed by organized/branded players. Even in this miniature share, a significant portion (of around 50%) was owned by foreign players like Mattel and Hasbro. In such scenario, would Adnan be able to fulfil his goals? What should be his competitive strategies for the same? This case helps the participants in analysing the challenges that Adnan could probably face in the Indian toy industry.

Prerequisite Conceptual Understanding/Before the Classroom Discussion

Students should be encouraged to read the following two seminal articles as the frameworks given in these two articles would be used during the classroom discussion of this case study.

• Michael E. Porter, “The Five Competitive Forces that Shape Strategy”, Harvard Business Review, January 2008 [Ref. R0801E] – To understand how the five competitive forces affect and define the nature of any industry
• Mark W. Johnson, et al, “Reinventing Your Business Model”, Harvard Business Review, December 2008 [Ref. R0812C] – To understand the elements of structuring a business model and use the same to construct Imagician’s business model

Case Positioning and Setting

This case can be used in the MBA/MDP for either of the following:

a) Strategy Course – Industry Analysis Module: To analyse the Indian toy industry with the help of Michael E. Porter’s Five Forces Model and understand the industry dynamics
b) Strategy Course – Competitive Strategy Module: To analyse Imagician’s competitive strategies and debate whether Imagician can be a challenger brand in Indian toys market

Assignment Questions

I. Discuss the nature and business dynamics of Indian toy industry using Michael E. Porter’s Five Forces Model.
II...........

Exhibits

Exhibit (TN)-I: Suggested Classroom Orchestration

Exhibit (TN)-II: Influencers for Toy Purchase

Exhibit (TN)-III: Nature of the Indian Toy Industry

Exhibit (TN)-IV: Types of Toy Consumption

Exhibit (TN)-V: Indian Toy Industry and Business Dynamics

Exhibit (TN)-VI: Why Chinese Toy Imports?

Exhibit (TN)-VII (A): Porter’s Five Forces Analysis of the Indian Toy Industry

Exhibit (TN)-VII (B): Porter’s Five Forces Analysis of the Indian Toy Industry

Exhibit (TN)-VIII: Imagician – Elements of Successful Business Model

Exhibit (TN)-IX: Efficacy of Imagician’s Business Model

Exhibit (TN)-X: SWOT Analysis of Imagician

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Abstract

This case study can be used to discuss a new entrant's challenges in fighting for a competitive position in an established industry with entrenched global players and unorganized sector commanding a lion's share of the market. In the backdrop of Indian Toy Industry's competitive landscape, this case study chronicles the beginnings of a fledgling Indian start-up, Imagician Playthings LLP's (Imagician) foray into the toy industry. With a size of INR8,000 crore, Indian toy industry is dominated by unorganized/local players with about 70% market share. The organized sector - with the top branded players like Mattel, Lego, Funskool, Reliance's Learners Play, Shinsei Industries' Mintoy Pvt. Ltd., etc. - commands around 30% market share. With close to 400 million kids (0-14 years) and with an abysmal average spend of about INR250 (compared to UK kids' average spend of INR14,000), Imagician’s Adnan Chara (Adnan) seemed to have found a sweet spot. With INR10 crore of revenue over the first year of operation, Adnan is confident of achieving INR100 crore turnover by 2022. Can he? With several challenges ' especially from that of video/mobile games, brand building and last-mile facilitation - what would it take Adnan to position Imagician as a successful challenger brand in Indian toy industry? What should be the road map for Imagician to cross the INR100 crore milestone? With Imagician's business model - a mix of importing, selling licensed labels of foreign brands and making own brands - can Adnan's venture be a game changer for Indian toy industry?

Pedagogical Objectives

  • To understand the nature and business dynamics of Indian toy industry using Michael E. Porter’s Five Forces Model
  • To analyze Imagician's business model and debate on its efficacy for achieving Adnan's goal of reaching INR100 crore by 2022
  • To design an appropriate road map, given the inherent threats and challenges, for Adnan to build a successful challenger brand in the Indian toy industry with the help of SWOT analysis

Case Positioning and Setting

This case can be used in the MBA/MDP for either of the following:

a) Strategy Course – Industry Analysis Module: To analyse the Indian toy industry with the help of Michael E. Porter’s Five Forces Model and understand the industry dynamics

b) Strategy Course – Competitive Strategy Module: To analyse Imagician’s competitive strategies and debate whether Imagician can be a challenger brand in Indian toys market



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