VERMONT TEDDY BEAR

Vermont Teddy Bear

Table of Contents

Company Background1

Definition of issues - Problem and cause2

Competition2

Low-profit margin2

Analysis of Case Data3

Cause and symptom3

Importance3

Alternatives and Objectives3

Decision Criteria and Solution4

Action proposal and effects4

Challenges of internationalization on the Business4

Market-based mechanisms5

Culture-based mechanisms5

Discipline mechanisms6

Corporate Responsibility6

Law, Accounting and Auditing Measures6

Internationalization in India6

Current scenario of the toy market in India7

Hanung Toys7

Toy imports in India7

Lack of successful players in India7

Expenditure on toys in India8

Toys as lifestyle commodities8

Market penetration of Vermont Teddy Bear Company in India8

Pricing Strategy9

Price Skimming Strategy9

Franchising10

Future plans of Vermont Teddy Bear Company10

International Business11

International Entry Choices12

Comparative Advantage13

Brand and Entering New Segments13

Increase Customer Base14

Use of Information Technology14

Issuance of Customer loyalty cards15

Customer Awareness through Social Media17

References19

Vermont Teddy Bear

Company Background

Vermont Teddy Bear Company is a small business that has employed 290 employees in the factory which is located in Vermont. The company does business on the Internet and by mail. The Vermont Teddy Bear Company is the largest hand-crafted of teddy bears in North America. Vermont Teddy Bear Company offers more than 100 bears that customers can choose from. Vermont Teddy Bear Company has set standards that are high and is a company that is socially responsible due to the “Save-the-Rainforest” campaign. The six operating segments of Vermont Teddy Bear Company are mentioned below.

1.Bear-Gram Services

2.Pajama Gram Services

3.The Tasty Gram Service

4.Calyx and Corolla

5.Retail operation segment

6.Wholesale corporate segment

The company also offers “Bears-to-business” service which is about serving the companies. Some of the customers of Vermont Teddy Bear Company are BMW, Johnson and Johnson and Pepsi Cola. However, the selling expense of the company is immense and they are spending a lot on marketing. Marketing was done through the following:

1.Direct response radio

2.Television commercials

3.Direct response print advertisements

4.Catalogue marketing

5.Online affiliated marketing program

Definition of issues - Problem and cause

Competition

Although the company is offering very excellent customer services, the major problem that the company is facing is competition. There is intense competition in the toy industry. This is because there is no barrier of entry. There are already many competitors in the market because of which Vermont Teddy Bear Company has to compete with many companies. Similar products are sold by many other companies at lower prices which are a major challenge for Vermont Teddy Bear Company (Armstrong & Kotler 2004, pp. 142). Names of some competitors are mentioned below.

1.Dakin

2.Steiff

3.North American Bear

4.Build-A-Bear Workshop

Low-profit margin

However, since the company is offering excellent customer services and a lot of expense is made on marketing, the profit margins are low. Marketing and selling expenditures of Vermont Teddy Bear Company has greatly impacted the profit levels.

Analysis of Case Data

Cause and symptom

Vermont Teddy Bear Company is only operating on the Internet. Therefore, the customers can only place orders on the Internet because of which the company needs to do powerful marketing to create awareness. Therefore, a log of advertising and marketing is being done to increase sales. However, this has greatly increased the budget and is impacting the profits of the company (Armstrong & Kotler 2003, pp. 10).

Importance

Handling the issues is important for the company. Every company operates for the sole purpose of making ...